Credit card companies get creative to attract new customers

Home > Business > Finance

print dictionary print

Credit card companies get creative to attract new customers

Shinhan Card’s new iPhone case released in September supports contactless payment via soundwave technology. [SHINHAN CARD]

Shinhan Card’s new iPhone case released in September supports contactless payment via soundwave technology. [SHINHAN CARD]

Major credit card companies are rolling out new products outside traditional payment services in an attempt to compete with big tech firms entering the financial services sector.
Shinhan Card in September released an iPhone case that can be used for contactless payment through card readers. As Apple Pay does not work in Korea, only Android smartphone users are generally able to pay using wireless services via platforms like Samsung Pay, leaving out the 10 million iPhone users in the country.
Shinhan integrated so-called soundwave technology into the case for transactions at franchise stores affiliated with the credit card. Soundwave technology, unlike the more common near-field communication (NFC) method, is able to work at all affiliated franchises in the country, boasting the same level of scalability as physical credit cards.
Shinhan’s iPhone case has a similar size and weight as an ordinary iPhone case and can be charged simultaneously with the phone. The 2,000 pilot versions sold out in just 12 hours in September at 45,000 won ($39.21) each.
“Among the 10 million iPhone users, around three million are estimated to be non-Shinhan Card members. We see them as potential new customers,” said a spokesperson for Shinhan Card. “In order to use the payment function on the iPhone, the customer needs to download the Shinhan PayFAN app and have a Shinhan credit card, so we expect synergy to occur.”
KB Kookmin in April released a long-term rental service for Apple products including the MacBook, iPad and iMac.  
Conventional long-term financial services were centered around new car buyers, but now consumers of electronic devices can also buy Apple products via 60-month rental periods with monthly payments. KB Kookmin buys the electronics on behalf of the customers and lends them for a maximum of 60 months while receiving monthly payments for usage.
The iPad Pro 11-inch (120 GB) is leased for around 20,000 won per month, and the iPad Pro 13-inch is leased for around 23,000 won per month. The interest rate on the lease is between 7 percent and 8 percent.
Hana Card launched an insurance service that pays for global shipment costs for package returns on overseas purchases. 
The free service covers damages worth less than 300,000 won up to three times per year. Customers can get reimbursed when the purchased items do not arrive within 60 days of purchase or arrive damaged. The company also covers return fees that occur due to flaws in the product or a change of mind.
This trend of credit card companies launching innovative products and services is a survival tactic in the increasingly competitive banking industry. There are two main revenue streams for credit card companies: Franchise commissions that incur whenever a member pays with the credit card at an affiliated store and interest from cash services and loans.
The credit card industry has felt the need to change its growth strategy as financial authorities have been pressuring banks to lower commission fees for payments at affiliated stores and the legal maximum interest rates have become lower. 
Card companies have also lost customers to tech firms like Naver and Kakao, driving the push for innovative products to gain an edge over emerging fintech companies.  
“The credit card industry will introduce a range of new products including personal wealth management services on par with private banking based on the customers’ credit card usage history as well as hyper-personalized cards that offer customized benefits based on an analysis of consumption patterns,” said a source in the credit card industry.

More in Finance

Data harvesting plus weak credit equals high rate loans

Corporations rush to bond market to lock in the low rates

Record breaking

Social distancing to be eased for shareholder meetings

Alternative investment guidelines issued by FSS, Kofia

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now