KB Kookmin Card Tightens Belt, Offers Voluntary Retirement for the First Time in 3 Years

Kookmin Card Implements Voluntary Retirement Following Shinhan
Also Reduces Costs by Cutting 'Interest-Free Installments'

Following Shinhan Card, KB Kookmin Card is also implementing voluntary retirement. This move comes amid growing concerns over deteriorating profitability in the card industry as credit card merchant fee rates have been lowered once again.

According to financial sources on the 7th, Kookmin Card recently completed the voluntary retirement process. A Kookmin Card official stated, "We implemented voluntary retirement to provide employees with an opportunity to plan their second life and to improve productivity by optimizing the organization's workforce structure."

This is the first voluntary retirement conducted in about three years since November 2021. At that time, Kookmin Card proceeded with voluntary retirement under the condition of paying up to 36 months' salary and reportedly let go of around 10 employees.

Kookmin Card is not the only card company initiating voluntary retirement. Shinhan Card, the number one credit card company, also accepted voluntary retirement applications in early last month. The voluntary retirement candidates were born between 1968 and 1974, with a total of 62 employees confirmed for voluntary retirement.

The reason these card companies are implementing voluntary retirement is to reduce costs such as labor expenses and defend profitability. Since this year, financial authorities have decided to lower card fees for merchants with annual sales of 300 million KRW or less from the existing 0.5% to 0.4%, a reduction of 0.1 percentage points. The fee rates for merchants with annual sales of 3 billion KRW or less have also been lowered accordingly. As a result, it is estimated that card industry merchant fees will decrease by about 300 billion KRW annually.

Additionally, the card industry has been cutting costs by reducing benefits such as shortening interest-free installment periods. Shinhan Card supported interest-free installments for up to 5 months at major merchants such as duty-free shops, department stores, and online stores as recently as last month, but this month, the interest-free installment period was reduced to a maximum of 3 months. BC Card has also shortened the interest-free installment period from 2-6 months to 2-4 months in areas such as travel, department stores, and online starting from the 1st of this month.

An industry insider explained, "Following last year's prolonged high interest rates and economic downturn, this year brings additional challenges such as card fee rate reductions. From the card companies' perspective, securing profitability through cost reduction is inevitable."