Key to Partnership Extension Is 'Number of Cards Issued'
Partnership Maintained If Operational Capacity Is Verified
Separate from Homeplus's Financial Repayment
Although Homeplus's credit rating dropped to D (default) as it entered corporate rehabilitation proceedings, it has been confirmed that major card companies such as Samsung, Shinhan, and KB Kookmin Card have decided not to cut their partnership cards and will continue their services. Since Homeplus received a grace period for repaying financial claims but announced that its large-scale supermarket operations would continue normally, the card companies judged that the number of card issuances is unlikely to sharply decline in the short term and decided to monitor the situation further.
According to the card industry on the 5th, among the eight full-service card companies (Lotte, BC, Samsung, Shinhan, Woori, Hana, Hyundai, KB Kookmin) and NH Nonghyup Card, the companies operating Homeplus cards are Samsung Card, Shinhan Card, and KB Kookmin Card. KB Kookmin Card has been operating the 'Homeplus KB Kookmin Card' since March 2011, Samsung Card the 'Homeplus Samsung Card' since October 2012, and Shinhan Card the 'My Homeplus Shinhan Card' since April 2017.
All three companies are closely watching the restructuring risks of Homeplus but have no plans to suspend issuing partnership cards or reduce discount benefits and event operations. Typically, when card companies first partner with a retailer like Homeplus, the contract period is set to five years. After that, unless there are special reasons, the contract is extended annually. Whether the partnership period with Homeplus will be extended after the current term ends is a matter of interest, but all three companies currently say they will "wait and see."
A Shinhan Card official said, "Even if Homeplus receives a grace period for repaying financial claims, since they said they will continue operations, we believe there will be no significant inconvenience to customers currently using the partnership cards," adding, "We will monitor whether Homeplus maintains its operational capacity so that there are no issues with the number of card issuances."
Samsung, Shinhan, Lotte, NH Nonghyup Card, and others also plan to proceed normally with the 'Homeplun' discount event for Homeplus's 28th anniversary sale, which runs from the 28th of last month to the 12th of this month.
A KB Kookmin Card official said, "It is not easy to discontinue products or adjust service benefits immediately just because Homeplus is undergoing corporate rehabilitation proceedings," adding, "We will operate scheduled events normally and will not adjust existing partnership card services."
Card companies are also aware that political circles and financial authorities have put in place measures to prevent them from arbitrarily reducing benefits just because the partner company's management risk increases. According to the Enforcement Decree of the Financial Consumer Protection Act, financial companies can reduce or change benefits if the profitability of financial products significantly decreases due to the additional services after providing them for more than three years. Once a product is launched, benefits cannot be changed arbitrarily for three years.
A Shinhan Card official said, "According to consumer protection laws, the scale of services must be maintained for a certain period after product launch," adding, "Services related to the launched partnership cards will continue to operate normally in the future."
Meanwhile, there is a forecast that the attractiveness of offline large supermarkets is declining, so business partnerships with card companies will not become more active. The proportion of large supermarkets in total retail sales is on a downward trend. According to the Ministry of Trade, Industry and Energy, last year, the sales ratio of large supermarkets to total retail sales was 11.9%, down 1.6 percentage points from 13.5% the previous year. Total sales were 23.45 trillion won, similar to the previous year's 22.52 trillion won.
An industry official said, "Regardless of the individual company's (Homeplus) restructuring, the growing consumer demand for online shopping over offline stores like supermarkets has been a long-standing issue from the card companies' perspective."
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