New Rush in the Card Business

Tough wrestling between the old credit card companies and the newly rising companies for the `gold mines` is anticipated for this year. New companies are successively stepping on to the stage of the big four including BC, Samsung, LG, and Kookmin Card.

Credit Card business sectors of Pyonghwa Bank and Hanvit Bank merged to launch `Our Credit Card (Uri Credit Card)` on Dec. 31st of last year and Hwang Seok-Hee, former governor of Pyonghwa Bank, took the seat as the new CEO. Choheung Bank and Hana Bank are moving forward in introducing foreign funds after setting up an independent business of credit card sectors. Shinhan Financial Group is also planning to establish a credit card company. Lotte Group is also rushing to enter the credit card business, targeting 4 million members of the Lotte Department Store. KDB Capital is planning to issue an `exclusive business purchase card`.

Once they all establish their own credit card corporations, the total credit card companies will increase to 13 from the current 7 companies.

The most formidable new comer for the current big four is the Diners Card, which was sold to Hyundai Motors last year. The Diners Card will begin a very offensive marketing campaign from the end of this month by dealing with VISA and Master Cards under the auspices of its holding corporation. A Hyundai Card source revealed that "we will try to join the leading group by developing various new products such as the Auto Card."

The new era of competition in the credit card market was opened by the high-speed growth of the market, stimulated by the expansion of tax deduction to the credit card purchase and the drastic increase of consumer purchase.

Rae-Jeong Park ecopark@donga.com