"Over 0.5% Benefit Cap..." Corporate Card Benefits Continue to Decrease

Corporate Card Benefits Limited to Within 0.5%
New Card Issuance Suspended and
Additional Services Like Airline Mileage Reduced

[Asia Economy Reporter Ki Ha-young] Since July, benefits that card companies can provide to corporate members have been limited to within 0.5% of card usage amounts, leading to a series of reductions in corporate card benefits. Following the suspension of new issuance for some corporate cards, airline mileage accumulation rates are also decreasing.

According to the industry on the 3rd, KB Kookmin Card will lower the mileage accumulation rates for airline mileage accumulation services among KB Kookmin corporate card products starting January next year and will eliminate additional service benefits. For Korean Air, the rate will change from 1 mileage per 1,500 KRW to 1 mileage per 3,000 KRW, and for Asiana Airlines, from 1 mileage per 1,000 KRW to 1 mileage per 2,500 KRW. Premium cards such as the Roble corporate card will see total mileage reduced from 1 mileage per 1,500 KRW to 1 mileage per 2,000 KRW.

For KB Kookmin SME corporate cards and partnership corporate cards, the SK Energy discount of 50 KRW per liter within a monthly fuel amount limit of 300,000 KRW has been abolished. This is because applying fuel discount services in addition to mileage accumulation services results in economic benefits exceeding 0.5%.

This measure follows the amendment to the Credit Finance Business Supervisory Regulations implemented since July. Economic benefits (such as additional services, fund contributions, cashback, etc.) that corporate members can receive are limited to within 0.5% of card usage amounts, provided that the total revenue from card usage exceeds total costs. Accordingly, seven major card companies immediately stopped issuing about 60 types of corporate cards that exceeded this limit upon the amendment's enforcement.

Although corporate card benefits are being reduced, the approval amounts for corporate cards remain at previous levels. According to the Credit Finance Association, corporate card approval amounts have recorded 13.5 trillion KRW, 14.6 trillion KRW, 15.6 trillion KRW, and 13.9 trillion KRW since July.

However, there are concerns that it may become more difficult for card companies to acquire new corporate members in the future. While the reduction in card benefits may not decrease corporate card approval amounts, the difficulty in differentiating card benefits is expected to solidify the corporate card market according to existing market share rankings.

As of the second quarter of this year, the market share of corporate cards among seven major card companies (based on credit sales excluding corporate purchases) is as follows: ▲KB Kookmin Card (19.82%) ▲Woori Card (16.59%) ▲Hana Card (15.23%) ▲Shinhan Card (14.42%) ▲Samsung Card (14.31%) ▲Hyundai Card (12.35%) ▲Lotte Card (7.27%).

An industry official said, "Because airline mileage products have complex structures, it took time to adjust corporate card benefits," adding, "Since corporate card benefits have been limited to within 0.5% since July, additional services are being gradually changed accordingly."