Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Card firms axe sales jobs amid digitization
Stickers show credit cards that can be used at a restaurant in central Seoul in this file photo. Card firms are reducing the number of salespeople amid digitization and falling profit margin. Korea Times file
By Kim Bo-eun
By Kim Bo-eun
Card issuers are reducing their number of salespeople due to a steady increase in digital transactions coupled with a deterioration in profit margins caused by the government's fee reduction policy.
Data show that 849 salespeople were let go at seven card firms ― Shinhan, KB Kookmin, Samsung, Hyundai, Hana, Woori and Lotte ― in the first half of the year, shrinking their numbers to 11,856 in May from 12,607 in December.
This appears to be a result of customers increasingly signing up for cards on websites and mobile applications.
The card issuers have adopted artificial intelligence-based chatbots which recommend personalized products to customers. These also cut the costs of maintaining call center employees.
Card firms need to cut costs because they are facing declining profits due to the government's policy to cut their transaction fees.
The policy intended to cut fees for small shop owners by making larger businesses pay more, but the plan faced a backlash as the latter refused to agree to fee hikes at the proposed level. This has put card firms under greater pressure.
Under International Financial Reporting Standards (IFRS), the combined net profit of card firms stood at 1.7 trillion won in the first quarter of this year, down 21.1 percent from 2.2 trillion won a year earlier.
IFRS is a set of global regulations that ensures transparency in company accounts and makes them comparable across international boundaries. It has stricter loan loss reserves rules than local standards.
An official familiar with the industry was cautious to speak about the issue, but acknowledged “increasing digital transactions and card fee hikes may have been among the reasons for their decision to reduce the number of salespeople”
Fifty-three card firms' sales branches were also closed in the first three months of the year to cut costs.
The seven firms had 216 branches as of the end of March, down from 269 in December.