[Real Estate Investment] T-Mef Incident Shrinks Sangteke... Focus on No-Performance, High-Efficiency Products

In the era of high inflation, as the so-called TMON and WEMAKEPRICE incidents have brought the era of sangtech (gift certificates + financial technology) to an end, attention is turning to no-spending-requirement, high-efficiency cards for saving living expenses. Representative examples include no-spending-requirement cards that do not enforce separate monthly usage requirements, various local love gift certificates (local currencies) issued by local governments, and private label credit cards (PLCC) that have strengthened benefits in partnership with specific companies.

◆ The Declining Era of Sangtech = According to the financial sector on the 31st, the aftermath of the TMON and WEMAKEPRICE incidents shows signs of a significant contraction in sangtech, which had been popular among thrifty consumers. Sangtech refers to financial technology using gift certificates. It is a technique where gift certificates, sold at a discount below face value, are purchased with credit or debit cards (gift certificate usage recognized products), then cashed out to receive benefits such as discounts, points, or mileage, or used to gain profits by using the discounted gift certificates.

Sangtech became widely known to general consumers as sellers offering high gift certificate discounts of around 7% began to appear, centered on TMON and WEMAKEPRICE. For example, if a consumer with a monthly spending of 500,000 KRW uses a credit card product that requires a previous month's spending of 1,000,000 KRW to receive a 5% point accumulation benefit (50,000 KRW), the remaining 500,000 KRW spending can be achieved by purchasing gift certificates. Considering the usual cash conversion fee of about 8%, depending on the gift certificate discount rate, it is possible to obtain 50,000 points without spending a single won.

However, due to the TMON and WEMAKEPRICE incidents, sangtech is unlikely to avoid significant contraction for the time being. As TMON and WEMAKEPRICE fell into crisis, the sale of highly discounted gift certificates also sharply decreased, and due to the delay in settlements, major partners and refund outlets temporarily suspended the conversion and use of gift certificates. An industry insider said, "Considering liquidity secured through gift certificate issuance and demand for small change, sangtech will not disappear completely, but it will take considerable time until partners recover and the industry reorganizes."

◆ Interest in Valuable Cards... Focus on No-Spending-Requirement and Local Currencies = As the sangtech market shrinks, interest in 'valuable cards' for saving living expenses is increasing. These include no-spending-requirement cards, PLCC cards, and local currencies that allow users to enjoy a certain level of discounts, points, or mileage benefits without going through the process of purchasing and cashing out gift certificates.

No-spending-requirement cards refer to card products that do not require separate previous month spending to qualify for discounts or points. Since most card products require a minimum previous month spending of 300,000 to 400,000 KRW and up to 1,500,000 to 2,000,000 KRW for discount or point benefits, these cards allow users to enjoy stable benefits even with relatively small usage amounts.

A representative product is the BC GOAT card. This product offers 1.5% points (Paybook Money) for domestic merchants and 3.0% for overseas merchants on usage amounts up to 1,000,000 KRW without any previous month spending requirement. For amounts exceeding 1,000,000 KRW, 1.0% applies domestically and 2.0% overseas. Hyundai Card's Zero Edition 3 card is also a representative no-spending-requirement accumulation product, offering 1.2% points (M Points) at all merchants. Hana Card's OneQ Card accumulates 0.8% at all merchants and 1.8% when paying with OneQ Pay or using overseas, with a monthly accumulation limit of 100,000 points (Hana Money).

Shinhan Card's Deep Dream credit card also offers 0.7% points (My Shinhan Points) at all merchants without limits, and applies accumulation rates of 2.1% to 3.5% (up to 50,000 points depending on usage) in some special categories. The Payco Point Card issued by Payco is a prepaid card but accumulates 0.5% for offline payments and 1% for online payments.

Discount and cashback products are also notable. Lotte Card's Digiroca London card offers 0.7% cashback on all merchant payments without limits and adds 1.0% for instant payments. Woori Card's Card Jeongseok EVERY1 offers 0.8% discount on all merchant payments and provides an additional 2% discount on online payments if the previous month spending exceeds 400,000 KRW.

Consumers who frequently use specific companies might consider PLCC products. KB Kookmin Card's PLCC, Coupang Wow Card, issued in partnership with Coupang, accumulates 2% Coupang Cash on Coupang payments and 0.2% on other merchant payments without previous month spending requirements. Currently, during a promotion, 4% (additional 2%) is accumulated on Coupang payments and 1.2% (additional 1%) on other merchant payments. This card gained popularity, issuing 500,000 cards within seven months of launch.

If most consumption occurs within one's residence area, local currencies are also worth considering. Seoul City's Seoul Love Gift Certificate offers discounts of 5-7%, and Busan's Dongbaekjeon provides 5-7% cashback depending on the merchant. Incheon City's e(e)um Card offers 5-10% cashback on payments depending on the merchant, with a usage limit of 300,000 KRW. These local currencies generally offer much higher discount and cashback rates compared to typical card products. However, users should carefully distinguish usage locations and note that benefits are not available outside the region.