December 22, 2024

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[THE INVESTOR] Costco Korea is likely to replace its credit card partner after an 18-year relationship with Samsung Card, according to Seoul Economic Daily on Aug. 20.

The Korean unit of the US discount wholesaler has reportedly recently named Hyundai Card as a preferred bidder to become its exclusive credit card issuer.

The nation’s top four card firms, including Shinhan, the largest with 21.53 percent market share, Samsung with 19.8 percent, Hyundai with 15.58 percent and Kookmin with 15.43 percent, participated in the bidding early this year.

At Costco outlets, shoppers are allowed to pay with a designated credit card or cash and debit cards only. It is a global policy to reduce merchant fees to its credit card partners, while customers are offered reward benefits. 

In Korea, the firm has paid a fee of 0.7 percent per transaction to Samsung Card, which compares to the industry average of 1.5 percent. Considering the Korean unit’s annual sales of about 4 trillion won (US$3.50 billion), the card firm’s fee revenue is estimated to reach 20 billion won to 30 billion won annually.

Of the 1 million Costco members here, about 300,000 people use the Costco-Samsung reward card, while others use their own Samsung cards. In order to prevent earlier confusions, the report said, Hyundai Card is likely to offer a grace period for switching cards.

A Hyundai Card spokesperson, however, declined to confirm the new partnership to The Investor, saying the firm has not yet received any notification from Costco.

By Lee Ji-yoon (jylee@heraldcorp.com)