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By Park Jae-hyuk
Visa has been facing difficulties in retaking its leading status in the Korean market, since the world's largest credit card network lost its lead to MasterCard in late 2019.
Data compiled by the nation's six card issuers ― Shinhan, KB Kookmin, Hyundai, Lotte, Woori and Hana cards ― showed as of the end of March, their Visa-branded cards accounted for 21.2 percent of their active cards that have been used over the past year.
Their MasterCard-branded cards accounted for 25.1 percent of their active cards.
The gap between Visa and MasterCard in terms of the Korean market share has widened, since the latter overtook the former in December 2019 for the first time since 1998.
As of the end of last year, Visa and MasterCard occupied a respective 21.4 percent and 24.5 percent of the nation's credit card network market.
The outcome is attributed to Visa's unilateral increase of commission rates for overseas payment to 1.1 percent in May 2016 from 1 percent, which led Korean card firms to pay more to their U.S. counterpart.
As domestic card issuers lack global networks, they have had to pay a certain amount in fees to international credit card networks, such as Visa, MasterCard, UnionPay, American Express and JCB, whenever their customers make payments overseas.
After the commission hike, Visa came into conflict with Korean card firms which alleged the U.S. financial giant did not discuss the matter with its Korean partners.
Visa was also embroiled in controversy as it did not raise its commission rates in China and Japan.
Back then, Korean card issuers filed petitions with the Fair Trade Commission, saying Visa was taking advantage of its monopolistic status.
The antitrust watchdog, however, ruled in favor of Visa in 2018, denying its monopolistic status in the domestic market.
Against this backdrop, MasterCard did not raise its commission rate from 1 percent.
Local card firms, which have also suffered deteriorating profits since the government ordered them to cut the fees they receive from their affiliated merchants, have eventually reduced issuance of Visa-branded cards, while offering more MasterCard-branded ones to their customers.
"Most customers do not care about affiliated global brands, because they do not make frequent overseas payments," a local card firm official said. "In contrast, card firms take into account commission rates and marketing campaigns when they join hands with global brands."
Visa declined to comment on data compiled by the six domestic card issuers.
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