Credit cards fight to process relief money
Gyeonggi Gov. Lee Jae-myung announced last month that the province would be disbursing a disaster allowance of 100,000 won ($80) to the 13.26 million residents of the province. The subsidies can be paid through debit or credit cards, and residents can use the subsides to purchase goods and services from participating local stores.
A total of 13 credit card providers have volunteered to participate in the program, with some offering benefits to attract customers.
If a Gyeonggi resident chooses to use their Woori Card to spend their benefit, the bank will give them a coupon for one free beverage of choice at Starbucks. Shinhan Card and Samsung Card are offering rebates ranging from 5,000 won to 10,000 won.
No benefits have yet been announced by KB Kookmin Card, Lotte Card or Hyundai Card, but the three companies said they are considering the offering of bonuses.
For the credit card companies, giveaways make perfect sense. Fees dropped last year and may have fallen further this year with the pandemic. Last month, the operating profit for the eight Korean card companies fell 5.3 percent on year, according to the Financial Supervisory Service.
“The market prospect is grim. Many credit card brands are trying to use the disaster allowance to bring in new members or motivate dormant members to use their credit cards again,” said an industry official.
As of March 23, a total of 15 regional governments have provided disaster relief to residents, but Gyeonggi is the only region that uses credit cards as a payment method.
Industry officials speculate that the marketing war between credit card companies is likely to heat up in the coming months. They add that the central government may use the “Gyeonggi model” and provide emergency disaster relief via credit cards once the exact conditions and amounts for the subsidies are set.
“I am aware that the central government has approached people in the industry to ask about the mechanics of the Gyeonggi model,” said an industry source. “I think the central government may be considering partnering with credit card brands.”
Use of card programs for distributing disaster relief funds might make sense.
“It takes a lot of time and money to create a new card just for emergency coronavirus benefits,” said an industry official. “If the government uses existing cards, it’s much easier to keep track of how much money is spent and where.”
BY SUNG JI-WON [email@example.com]
with the Korea JoongAng Daily
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