South Korea’s credit card companies are taking a concentration strategy to cater the needs of premium customers with high purchasing power to generate revenue through annual fees and transactions amid the worsening business environment due to high interest rates and reduced commission fees.

According to CARDGORILLA, a credit card platform, the average annual fee for 59 major credit cards launched in the first half of the year was 83,453 won ($64.22), up 119 percent from 38,171 won for 76 major credit cards launched last year.

Ten credit cards with annual fees of more than 100,000 won were released in the first half of this year, compared to only seven last year.

There were also no cards with annual fees in the 200,000 won range last year, but five cards were released in the first half of this year.

The upper end in the annual fee has also increased significantly.

Last year, Hyundai Card Co.’s “The Red Stripe” had the highest annual fee of 500,000 won. This year, KB Kookmin Card Co ’s “HERITAGE Reserve” topped the list with 800,000 won.

Card companies are releasing more premium cards as they see the economic power of potential customers.

Premium cards are used by customers with a certain level of economic power as they have higher annual fees compared to regular cards, making it possible to earn a stable profit in terms of payment performance.

Card companies have seen a rise in annual fee revenue.

According to data from the Financial Supervisory Service, seven card companies, including Shinhan Card Co. and KB Kookmin Card, earned 314.8 billion won in annual fee revenue in the first quarter of this year, up 6.5 percent from 295.4 billion won in the first quarter of last year.

Over the past four years, the revenue from annual fees among these seven card companies increased by 33.8 percent from 235.2 billion won in the first quarter of 2019.

Credit card companies saw an increase in card payments in the first half of this year, resulting in weaker earnings.

In the second quarter of this year, the amount of personal card approvals reached 23.7 trillion won and the number of approvals reached 6.67 billion, up 5.1 percent and 7.1 percent on year, respectively, according to the Credit Finance Association.

On the other hand, card companies’ earnings have plummeted.

In the first half of this year, Shinhan Card posted a net profit of 316.9 billion won, down 23.2 percent from the same period a year ago.

Samsung Card’s net profit was also down 8 percent to 29.06 billion won, and that of KB Card 21.5 percent to 19.29 billion won, Hana Card 23.7 percent to 72.6 billion won, and Woori Card 38.7 percent to 81.9 billion won.

By Choi Keun-do and Yoon Yeon-hae

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