35 Types of Discontinued Cards and 63 New Cards This Year
[Asia Economy Reporter Ki Ha-young] Office worker Park So-eun (35, female) is currently considering a replacement card as her NH Nonghyup Syrup Card, issued five years ago, is about to expire. This card, which offered coupons worth approximately 100,000 KRW when spending over 2 million KRW, effectively allowed users to spend up to 5% of their usage amount like cash, but it was discontinued just six months after its launch. Park said, "All the so-called premium cards have already been discontinued," adding, "There are no worthwhile cards with decent benefits anymore."
This year, the number of discontinued cards in the market has significantly decreased compared to last year. This is interpreted as a result of most of the products considered premium cards by consumers having already been phased out. On the other hand, newly launched cards have maintained last year's level, with nearly twice as many new cards entering the market compared to discontinued ones.
According to the industry as of April 9 this year, 22 types of credit cards from seven major card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana) have been discontinued. Compared to 157 types of credit cards discontinued last year, this number has sharply decreased. The trend of increasing discontinuations, which saw 73 types in 2017, 82 in 2018, and 160 in 2019, has been reversed.
Meanwhile, 55 types of new credit cards were issued, which is 2.5 times the number of discontinued credit cards. Including check cards, a total of 35 types of cards have disappeared from the market this year, while 63 new cards have been launched.
The industry views the reduction in discontinued cards this year as a result of phasing out most card products that deteriorate card companies' profitability. High-cost cards, often called 'benefit-rich cards,' have disappeared in recent years. Last year alone, premium cards such as the 'Emart KB Kookmin Card' and 'Payco X Lotte Card' were discontinued.
It Will Be Difficult to Increase Card Benefits Under the 'Profitability Analysis System Guidelines'
On the other hand, new cards are being launched this year at a pace similar to last year. New credit cards launched were 135 types in 2017, 109 in 2018, 61 in 2019, and 144 in 2020. This year, cards offering benefits related to digital subscription services, delivery applications (apps), and online shopping continue to enter the market following last year. Additionally, the increase in partnership cards, including Private Label Credit Cards (PLCC), is also noticeable.
An industry insider explained, "Card companies have reduced overall product costs, including marketing expenses, and have phased out most products that worsen profitability," adding, "Since last year, under the 'Profitability Analysis System Guidelines,' card development must be designed so that revenue exceeds sales costs, so the number of new card launches is decreasing compared to before."
Some expect that, depending on the outcome of this year's discussions on merchant fee rate recalculations, the number of discontinued cards may increase again starting next year. After the 2018 merchant fee rate recalculation, card companies whose profitability worsened discontinued many cards in 2019 and 2020. Another industry insider predicted, "If merchant fee rates decrease again, the trend of analyzing profitability and discontinuing unprofitable products will continue."
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