Credit Card Companies Emphasizing Cost-Effective PLCCs

Lotte, Hana Card, and Others Launch PLCCs One After Another
Leading Hyundai Card Also Plans Release in Q1
Choosing a 'Cost-Effective' Strategy Amid Cost Concerns

[Asia Economy Reporter Minwoo Lee] Credit card companies, which had been focusing on cost management by reducing various user limits and marketing expenses, are increasing their issuance of Private Label Credit Cards (PLCC). Since PLCCs are cost-effective in terms of operating expenses and somewhat easier to attract customers, it is expected that they will continue to pursue a 'cost-effectiveness' strategy for the time being.

According to the card industry on the 23rd, Lotte Card launched the PLCC product 'Namu Lotte Card' last week in partnership with NH Investment & Securities. The card features a refund of up to 50% of the merchant payment amount back to the NH Investment & Securities account. On the 8th, they also launched another PLCC called 'LOCA Mobility Bandding Card' together with their subsidiary Rokamobility, which operates a transportation card business. The strategy focuses on public transportation discounts to attract customers during the high inflation period.

Hana Card has also been releasing PLCCs one after another since the beginning of the year. On the 7th of last month, they partnered with Ediya Coffee to launch an exclusive PLCC product that uniquely offers various benefits without any performance conditions in the same industry. Then, on the 12th of the same month, they launched another PLCC in collaboration with KakaoBank. Despite tightening belts due to funding cost issues caused by the bond market squeeze, they are aggressively pursuing sales. This move is interpreted as a strategy to escape the 7th place among the seven domestic full-service card companies (based on January domestic individual usage) by actively promoting cost-effective PLCCs.

Hyundai Card, which was the first in Korea to launch a PLCC, plans to release a PLCC product in the first quarter of this year in partnership with Mirae Asset Securities. Since starting with Emart in May 2015, they have launched PLCCs with 16 domestic and international companies including Hyundai-Kia Motors, Korean Air, Costco, Starbucks, Baedal Minjok, Naver, and Amex. Recently, there have even been rumors about launching an 'Apple Card' specialized for Apple Pay, following the decision to prioritize the release of Apple Pay.

The reason card companies are focusing on PLCCs is that they are evaluated to be cost-effective. Since credit cards operate through exclusive partnerships with other companies, they provide concentrated benefits and services to the partner companies. This allows them to directly absorb the loyal customers of the partners. Unlike general co-branded cards where the card company bears all responsibilities, operating costs are shared with the partner companies, saving various expenses.

An industry insider explained, "Since the authorities are pressuring card companies to lower loan interest rates, card companies cannot ignore cost issues. PLCC cards do not require employment or promotional costs for recruiters, and customer acquisition is somewhat easier, so there is a recent trend to focus on them."