Korean credit card companies are gradually weakening their business relationships with Visa and MasterCard, while boosting ties with China UnionPay and Discover Card as part of their cost cutting strategy.
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For using the Visa and MasterCard logos on their cards, the South Korean card companies pay an annual average of KRW140 billion in fees, according to a report by Korea Bizwire.
The publication reported that both Visa and MasterCard charge 1% of fees for every transaction made overseas and 0.04% of fees for domestic transactions.
Due to the decreasing business partners, credit cards affiliated with Visa and MasterCard have decreased by 7.9% to 75.9 million by 2012 end from 82.4 million at the end of 2010.
To slash overseas brand royalty payments, Shinhan Card is reportedly planning to join hands with Japanese payment gateway provider in NTT Data in September 2014.
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By GlobalDataFrom May 2013, the card company has also started issuing UnionPay credit cards and has issued more than 500,000 cards so far.
BC Card, partnering with Discovery Card of the US, Japan-based JCB, and UnionPay of China, has started offering the "Global Card" without any transaction fee and low annual membership fee. The company has issued 4.7 million cards until now.
"By cutting the ties with major international card issuers we could save a huge amount in fee payments. This in turn will help us improve our financial standing and customer service quality," a BC Card official was quoted as saying by the publication.
Apart from these, Lotte Card has also launched six different types of UnionPay Card, enabling its users to access nearly 2.2 million UnionPay merchants and ATM networks in China. At present, the company has attracted 300,000 card users.
