By Lee Hyo-sik
Staff Reporter
A growing number of foreign residents here are using credit and debit cards as card firms are moving to issue more plastic to non-Koreans. As the market has reached saturation point among the local population, card issuers have begun targeting foreigners residing in the country to secure new customers and increase earnings.
According to the industry Friday, the number of foreigners holding either credit or debit cards stood at 294,700 as of March, up 330 percent from 68,500 in 2005.
Companies have eased rules on card issuance to non-Koreans in a bid to increase their customer base and generate greater earnings. The market for Koreans have become saturated as almost all Korean adults, including university students, holds at least one card.
An official at KB Card said the company used to look at applicants' credit records, job status and other criteria. ``But since November 2006, we issue cards as long as applicants have clean credit history, regardless of their job status,'' he said.
Hyundai Card was issuing cards only to nationals of the seven most advanced economies, including the United States and Japan, until last year. But now citizens of 20 countries, including China and Brazil, can obtain credit or debit cards.
However, industry analysts cautioned that a rise in the number of cards issued to foreigners could hit the companies hard if foreign residents default on payments and leave the country, saying that companies should carefully screen applicants.
Following the 1997-98 Asian financial crisis, the government made it easier for companies to issue credit cards, encouraging consumers to spend on card debt to boost domestic demand. But credit card bubble burst in 2001, many who failed to meet their payments credit delinquents.
But card issuance has increased over the past few years as the government has allowed salaried workers to deduct card spending from their taxable income. The government promotes such spending as it can trace the income of self-run businesses.
Shops and other self-employed businesses that accept credit or debit cards for payment are required to pay a small portion of the transaction amount, around 2 to 3 percent, as commission to card companies.