November 24, 2024

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Last year, South Korea's card payments surged past 900 trillion won ($644.6 billion) for the first time, amid heightened inflation and escalating consumer prices.

Data compiled by the Financial Supervisory Service reveals that the combined card payment performance of the nation's eight major credit card companies -- Shinhan, Samsung, Hyundai, KB Kookmin, Lotte, Woori, Hana, and BC -- reached 920.5 trillion won, marking a 6.4 percent increase from the 2022 total of 856.4 trillion won.

This milestone marks the first instance annual card payments exceeded 9 trillion won since the FSS began collecting data in 2006.

Shinhan Card led the pack, accounting for over a fifth of the total with 190.6 trillion won. It is poised to surpass the 200-trillion-won mark this year, becoming the first in the industry to do so.

KB Kookmin Card followed with 164.4 trillion won, Hyundai Card with 160.1 trillion won and Samsung Card with 149.2 trillion won in total payments.

South Koreans' card spending has shown a consistent upward trajectory. A straightforward comparison against the total consumption expenditure in the private sector, as reported by Statistics Korea, showed that the combined payments from the eight card issuers -- amounting to 447.1 trillion won -- represented 57 percent of total private consumption.

By contrast, last year saw a significant surge in this rate to a remarkable 84 percent. This indicates that South Koreans swiped credit cards for 84 percent of all their consumption expenditures.

An industry official attributes this trend to the widespread availability of card payment devices in South Korea.

"As the economy advanced, local card companies expanded payment coverage, stimulating consumption. Consequently, paying with cards has become more convenient than cash or mobile payment devices compared to other countries," the official noted.

Additionally, industry sources also analyzed that a surge in the inflation rate, averaging 3.6 percent last year, up from 1.5 percent in 2020, should have played a significant role in driving the overall expansion in payments.

Despite the upward trend in payment volumes, card companies are grappling with declining profits. Shinhan Card's consolidated net profit dropped to approximately 620.5 billion won last year from 641.4 billion won in 2022 and 675 billion won in 2021. Similarly, KB Kookmin Card saw its net profit decline for two consecutive years, from 418.9 billion won to 351.1 billion won during the same period, while Samsung Card experienced a decrease from 622.5 billion won in 2022 to 609.4 billion won in 2023.

Conversely, Hyundai Card witnessed a rise in net profit to 265 billion won in 2023 from 254 billion won the previous year.

By Choi Ji-won (jwc@heraldcorp.com)
The Korea Herald