Internet-only banks, card firms boost partnerships amid industry slump

Toss Bank CEO Rhee Eun-mi, left, and Hana Card CEO Lee Ho-sung pose after signing an MOU at the bank's headquarters in Seoul, Friday. Courtesy of Toss Bank

An increasing number of card firms are partnering with internet-only banks to jointly issue private label credit cards (PLCCs).

This outcome highlights the synergy between credit card companies, which are seeking to increase their market share in a sluggish industry, and internet-only banks, which are looking to enhance customer engagement.

A PLCC refers to a card that offers exclusive benefits and services in partnership with a specific company.

Toss Bank and Hana Card signed a memorandum of understanding (MOU), Friday, in preparation for the launch of a PLCC during the third quarter of this year. Toss Bank will be in charge of recruiting card customers, while Hana Card will handle general duties such as issuance and consultations. Customers can apply for the card through Toss Bank's app.

KakaoBank and Shinhan Card also formed an MOU last month for developing a PLCC and marketing strategies. Their cooperation caught market attention as they are both leaders in their respective industries, with 24 million users in KakaoBank and 32 million in Shinhan Card.

Card companies have traditionally cooperated with the distribution industry, focusing their attention on consumers with significant fixed expenses.

However, the industry started aiming to diversify its customer base by partnering with internet-only banks, which have a high proportion of young customers. Internet-only banks can easily enter the credit card sector by utilizing the existing infrastructure of card companies. For consumers, this means more choices in terms of platforms and benefits.

"We are very pleased to introduce a new type of PLCC card through our collaboration with Hana Card," Toss Bank CEO Rhee Eun-mi said. "We will ensure thorough preparation so that customers can intuitively enjoy the benefits."