[Asia Economy Reporter Eunju Lee] As the card industry struggles to secure sources of revenue, it is focusing on strengthening its own app functions to attract consumers. To survive competition with big tech companies, card companies have launched a drive to increase app dependency by adding various benefits that can be offered to consumers through their own card apps.
According to the card industry on the 22nd, Lotte Card invested 10 billion KRW at the end of last year to carry out a full-scale app renewal. In January, the card app’s name was also changed to ‘DigiRoca.’ This reflects the company’s commitment to strengthening digital services for customers. A Lotte Card official explained, “If Lotte Card had existed ‘behind’ customers as a payment method until now, it now means that we will actively stand ‘in front’ of customers by utilizing the data accumulated so far.”
DigiRoca aims to be a curation platform that proactively offers services or content worth paying for to customers based on accumulated consumer data during the payment process. This is interpreted as a judgment that new revenue sources can be secured only by surpassing the service level of the card industry, which supports payment infrastructure from the back end. DigiRoca allows users to check and book intercity buses. Shopping through the app is also possible, and users can enjoy videos or webtoons. By adding various functions within the app, it appears that Lotte Card users are encouraged to make purchases through DigiRoca. As user consumption through the app increases, commission profits or brokerage profits generated here may also increase in the future.
Woori Card has adopted a strategy to enhance the convenience of card services through integration with Woori Financial Group’s affiliated apps. First, the independently existing Woori Card app and Woori Pay app were merged into one. Convenience was enhanced by adding payment functions that were not available in the Woori Card app through the Woori Pay app. The Woori Pay function was also installed in the Woori Bank banking app. The purpose is to connect so that Woori Bank customers can conveniently use Woori Pay. Customers using Woori Financial Group’s services can use payment services more smoothly through a few consolidated apps.
In the case of Woori Card, it is also exploring ways to increase Woori Pay users by utilizing large affiliated merchants partnered with the company. Functions of Woori Pay are added to the apps of large affiliated merchants partnered with Woori Bank. Recently, Woori Card’s simple payment service was installed in the Yonsei University student ID application. This not only increases card users but also provides payment infrastructure to corporations that find it difficult to build their own payment systems. This strengthens the drive to secure new revenue sources.
Shinhan Card is competing with big tech companies through its main digital platform, Shinhan Play. Through Shinhan Play, users can use payment, asset management, points accumulation, and ID verification services all at once. In particular, it has improved payment convenience in offline spaces. Shinhan Play offers a ‘Shake & Slide’ function that allows payment to be made simply by shaking the smartphone, without separately launching the app. Users can also view various customized content by setting their interests in Shinhan Play.
The reason card companies are strengthening their apps to secure customer touchpoints upfront, rather than just supporting payments from the back end, is the urgency to secure new revenue sources. A card industry official explained, “There are ongoing regulations to reduce card company fees, as well as maximum interest rate regulations. It is not easy to find competitiveness in the core business (through card fees), so new revenue sources must be discovered.” According to card industry insiders, as the traditional business model of card companies, ‘card company merchant fees,’ continues to decline, there is a widespread sense of crisis that the core revenue source of card companies is disappearing, making the future uncertain.
To overcome the crisis, it is judged that starting with utilizing the accumulated customer payment data is necessary. This can increase dependency on the app even slightly. He added, “Big tech’s pay services have approached consumers quite easily, so card companies are thinking about how to secure and retain customers. The most well-utilized resource is the payment data accumulated by card companies so far. It is very high-quality data because it can identify specific customer usage locations. If used well, it is believed that card companies can provide customized recommendation services better than any other company, and this will increase customer inflow to card apps. Right now, it is just the starting level,” he said.
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