Credit card companies, whose profitability is deteriorating due to a cut in merchant commission rate..

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Credit card companies, whose profitability is deteriorating due to a cut in merchant commission rates, are increasing their installment financial assets.

According to the financial sector on the 26th, six credit card companies (Shinhan, Samsung, KB Kookmin, Lotte, Hana, and Woori Card) that handle automobile installment financing totaled KRW 2.647.2 trillion in the first half of this year, up 8.2% from KRW 2.446 trillion in the same period last year. Compared to the first half of 2023 (1.6556 trillion won), which was two years ago, the growth rate reached 60%.

Shinhan Card has the largest amount of installment finance handled, with 953.4 billion won in the first half of this year alone, up 77.3 billion won from the same period last year. KB Kookmin Card (455 billion won), Lotte Card (272.1 billion won), and Samsung Card (150.6 billion won) followed.

Credit card companies are actively handling related products because of their declining profitability. Since this year, the competitiveness of the main business has deteriorated as the preferential commission rate for merchants with annual sales of less than 3 billion won has been cut by 0.05 to 0.10 percentage points. However, rather than expecting profitability, credit card companies seem to have chosen automobile installment financing products as a resource to replace the declining merchant commission income. Credit card companies are also inducing people to pay in installments by credit card when purchasing a car. Since card installment payments are payments, not loans in form, they are not subject to the Total Debt Service Ratio (DSR). As a result, credit card companies provide high commission rates to brokers and encourage them to recommend card installment payments to car purchasers.

Credit card companies are providing mid to late 1% of their payments as installment brokerage fees, and until last month, some credit card companies reportedly paid up to 2.7%. Payment fee income is given to recruiters, and credit card companies aim for installment interest income and customer acquisition effects.

[Reporter Park Na Eun]