Cost-cutting card companies primed to go mobile
It will take just one day to issue such mobile cards on smartphones, compared to the one or two weeks required to apply and receive plastic cards through the mail, and they can be used offline and online.
Leading credit card companies are preparing to launch mobile cards this month as they see the need to tap into the mobile world with more and more consumers preferring simpler and easier payment tools on their smartphones.
BC Card said on Sunday it has completed testing its mobile card technology, which turned out successfully when the company’s executives and employees used mobile cards at the corporate canteen.
Shinhan Card, Samsung Card, Lotte Card, Kookmin Card and Hana Card each plans to introduce four to six types of mobile cards this month.
Until recently, mobile cards referred to physical cards that appeared on smartphones in the form of apps. Plastic cards had to physically exist in order to download the app and link them with smartphones.
But the credit card world has been changing since the Financial Services Commission last month allowed mobile cards without issuing plastic cards based on identity verification. The whole process - applying for a card, credit examination, issuance, payment, cancellation and termination - now can take place on smartphones.
The mobile card market is expected to grow significantly as credit card companies look to cut costs.
According to a report by Jhun Ha-jin, a representative of the Saenuri Party, a minimum of about 1.2 trillion won ($1.1 billion) was used to issue 240 million plastic cards last year. Each card cost 5,000 won to 15,000 won to issue.
Use of mobile cards is on the rise, according to data by the Bank of Korea. Mobile card payments surged about six times, from 2.6 billion won per day in 2013 to 13.1 billion won last year.
The number of mobile cards downloaded on smartphones also jumped from 4.5 million to 15.87 million during the same period.
Yet, mobile cards account for a mere 1.1 percent of all payments and 6.5 percent of card issuances.
Despite rising interest in the new digital payment tool, some are concerned about the security of mobile cards. Older Koreans who are not very familiar with smartphones tend to be skeptical.
“I have installed an application on my smartphone, but haven’t actually used it,” said the 61-year-old head of a leading credit card company.
Risks of card theft are likely to be higher with increasing threats of hacking into computers and smartphones. Losing a smartphone is another risk.
The financial regulator bans using mobile cards for loans and cash withdrawals, and requires issuance of cards within 24 hours of application to stop hackers from instantly downloading someone else’s mobile card and using, then deleting it.
Card companies will be required to notify consumers when their payments are approved, the FSC said.
BY SHIM SAE-ROM, SONG SU-HYUN [firstname.lastname@example.org]
More in Industry
As profits boom, big Korean companies reduce head counts
Hyundai Heavy confirms bid to buy stake in Doosan Infracore
It's a wrap
Joining hands for MOU