South Korean debit and credit card firms are on alert as major fintech companies are entering the financial platform service market to challenge existing big players, such as Kakao Corp. and Naver Corp. Card firms are spending a huge amount of money to attract new customers, but an increasing number of loyal customers are leaving them. Moreover, they are increasingly losing their footing due to the emergence of new simple payment service providers.
Rainist Co., an operator of mobile asset management service app Bank Salad, is to introduce its simple remittance service at the end of this month at the earliest, according to financial industry sources on Aug. 19. Moneylabs Inc., which provides mobile asset management service Broccoli, will also enter the financial platform business in the near future. As the simple payment market has grown three-fold from 26.80 trillion won (US$22.14 billion) in 2016 to 80.14 trillion won (US$66.20 billion) in 2018, more and more companies are pushing into the financial platform service market.
Card firms’ woes are increasing with the emergence of new operators in addition to exiting leading simple payment service providers. They have already injected a considerable amount of money into marketing activities, but they are failing to narrow the gap with leading simple payment operators. The emergence of new service providers is likely to accelerate the departure of their customers.
The combined simple payment marketing costs of seven credit card companies came to 6 trillion won (US$4.96 billion) last year. An official from a card firm said, “We cannot give up on the simple payment market. We need to come up with a strategy to compete with existing strong players and new players.” It seems impossible for credit card companies to survive without innovation as financial authorities have forced them to lower transactions fees and new fintech companies are expanding business.