Woori Card Launches Financial Discount Coupons to Strengthen Loyalty
Card Loan Revenue Expected to Decline
Some Predict Expansion of Cash Services
[Asia Economy Reporter Ki Ha-young] Starting this year, long-term card loans (card loans) have been included in the borrower's total debt service ratio (DSR) on a weekly basis, causing card companies to struggle to find ways to prevent profitability deterioration.
According to the card industry on the 14th, Woori Card introduced a financial discount coupon called 'Wyse Money' starting this year. This service provides discount coupons to members based on their credit sales and card loan usage performance. Interest fees for card loans and short-term card loans (cash services) can be cashed out at 1 Money = 1 KRW and used. It is a financial service operated separately from Moa Points and Woori Won Honey Money.
For personal credit card performance such as lump-sum payments and installments, 1,000 Money is provided for amounts over 500,000 KRW, and 2,000 Money for amounts over 1,000,000 KRW. In the case of card loans, Wyse Money is provided from 5,000 Money up to a maximum of 40,000 Money upon maturity repayment, depending on the usage period and loan amount. The validity period is six months. A Woori Card official explained, "This is the first financial service introduced internally at Woori Card," adding, "It was launched to strengthen the loyalty of existing customers."
Some interpret Woori Card's move as a measure to maintain customer demand following the DSR regulation applied from the 1st of this month. With the application of borrower-based DSR, the loan business scale, which had offset merchant fee deficits, is expected to shrink, so this is seen as an attempt to strengthen the existing customer base.
In fact, card companies are seeking solutions to protect loan revenue that will decrease due to strengthened household debt regulations. However, since financial authorities are concerned about loan defaults in the secondary financial sector and have been closely monitoring the rapidly increasing card loans over the past two years, the atmosphere is not conducive to expanding direct marketing related to card loans. Therefore, there is also a forecast that cash services, which are exempt from DSR regulations, will inevitably increase. Although the use of cash services is declining due to the rise of internet banks and fintech, card companies prefer cash services because they can charge higher interest rates than card loans. Currently, Lotte Card and KB Kookmin Card are running events that provide cashback when using cash services.
An industry official said, "From July, borrower-based DSR will apply if the loan amount exceeds 100 million KRW, so the scale of card loans is likely to decrease," adding, "We are looking for ways to compensate for card loan revenue, but since there is no sharp solution, we will eventually have to expand cash services and others that are outside the regulations."
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