Banks desert BC Card to increase profitability

The headquarters of BC Card located in central Seoul / Courtesy of BC Card

Card company responds by strengthening marketing and partnership initiatives

By Anna J. Park

Standard Chartered Bank Korea has decided to discontinue its joint card issuance business with BC Card from November. With this decision, most cards issued by the bank, ranging from credit and debit to business credit cards will be stopped from issuance or renewal from November. Standard Chartered Bank Korea explained that the decision is primarily based on improving the bank's profitability as well as on innovating card services.

“Aiming to proactively respond to rapidly changing external and internal situations, the decision aims to create a new business platform for credit cards for the sake of both improving profitability and providing varied and quality services for customers,” an official from the bank told The Korea Times, Wednesday.

The official explained that the bank will strengthen its strategic partnership with Hyundai Card, with which the bank signed an MOU agreement in April to develop innovative and differentiated financial services jointly based on data science analysis. The bank plans to launch card services in partnership with Hyundai Card from the second half of this year.

Standard Chartered Bank Korea is one of BC Card's many clients that has decided to part ways with the credit card processing provider. Jeonbuk Bank shifted its primary credit card processing provider from BC Card to KB Kookmin Card last year. Woori Card also declared last year that it will establish its own settlement network, independent from that of BC Card, and said it is planning to secure its own affiliated card merchants nationwide.

As some local banks or local card companies ― mostly from major financial groups ― aim to set up their own settlement networks, they may no longer need to rely on BC Card's processing anymore, threatening BC Card's long-held status of handling card payment network processing for decades. Since the mid-1980s, BC Card has been conducting card payment and settlement processes and other key procedures such as card issuing for local card businesses.

BC Card's market share in the credit card payment and settlement business has dropped to 23.1 percent as of the end of last September, from 26.1 percent in September 2016.

The card company is responding to such challenges by strengthening its own marketing initiatives and partnerships. BC Card has set up its own online commerce platform where artworks could be traded, while also planning to support up-and-coming artists' exhibitions.

BC Card also holds summer discount events for admission tickets at nationwide water parks. The firm has been launching new credit cards by partnering with diverse parties, such as game companies or entertainment shows, aiming to expand the traditional scope of credit card customers.