Internet-only banks may enter credit card business

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Internet-only banks may enter credit card business

Toss Bank may get into the credit card business, according to unconfirmed press reports.
The bank, the third internet-only bank in Korea, is preparing to start business next year and will begin issuing credit cards if regulations change and make it easier to do so. It would be the first internet-only bank to get into that line of business.  
According to the Financial Services Commission (FSC) Monday, it is reviewing the current Specialized Credit Financial Business Act, which states the qualifications a bank must meet for it to operate a credit card business.
Easing of qualifications was discussed at a meeting between the FSC and representatives from the Financial Supervisory Service, banks, fintech companies and academics earlier this month to improve financial regulations for the digital economy.
"During the meeting, there was a consensus that regulation should be eased to allow banks to do credit card business as well if the bank meets capital requirement for banking business, but nothing is fixed yet," an FSC official told the Korea JoongAng Daily on the condition of anonymity.  
Industry sources say Viva Republica, the owner of Toss, is likely to be interested in entering the credit card business, as it is already involved in a wide range of financial businesses, including banking, securities and insurance.
Toss Bank and Toss Securities are expected to open next year. Toss Insurance is already operating as a general agency, which sells insurance products from multiple insurance companies.
Operating a credit card business could enable Toss Bank to offer a diverse range of services compared to existing internet banks and also grant it access to people's payment data.
Toss released a credit card with Hana Bank in April, but the app was responsible for marketing and all the actual card-related processes were handled by the bank.
When asked about the possibility of entering the card business, a Viva Republica spokesperson said that the bank is reviewing the possibility along with many other business opportunities. They emphasized that nothing has been decided yet.
If the regulations on operating both banking and credit card businesses are loosened, other internet banks — KakaoBank and K Bank — may also be interested in expanding into this business.
"We are not ruling out the possibility," a KakaoBank spokesperson said on the condition of anonymity. "We've started by issuing credit cards in partnership with card companies and later when there is a good opportunity, we might jump in."
KakaoBank has released credit cards in partnership with four card companies, including Shinhan Card and Samsung Card in April. The cards were issued by the card companies rather than the internet bank. Kakao was responsible for marketing and offering specialized card benefits.
K Bank currently doesn't have any credit card products and says that it is too early to comment on expansion into the business line.
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