SEOUL, Aug. 16 (Korea Bizwire) — The combined net profit of South Korea’s major credit card firms plunged nearly a third in the first half from a year earlier due mainly to decreased swipe fees, industry data showed Thursday.
Eight card issuers, including Shinhan Card Co., Samsung Card Co. and KB Kookmin Card Co., posted a combined 966.9 billion won in net profit in the January-June period, down 31.9 percent from the same period last year, according to the data.
In particular, industry leader Shinhan Card saw its first-half net profit nose-dive 55.3 percent on-year, while that of Hyundai Card Co. tumbled 40.8 percent and KEB Hana Card Co. 31.3 percent.
Only KB Kookmin Card and Woori Card Co. logged positive net profit in the first six months.
The massive drop was largely driven by one-off factors like dividend incomes and tax refunds last year.
But the card firms’ net profit remained in negative territory even though such one-off factors were excluded.
Shinhan Card’s net profit fell 9.3 percent for the first half without one-off revenues, with that of Hyundai Card dropping 5 percent. KB Kookmin Card and Woori Card saw their net profits decline 2.5 percent and 6.3 percent, respectively.
Insiders said the government-led policies to decrease card transaction fees weighed heavily on the companies’ performances.
Under the current system, merchants who accept credit cards have to pay swipe fees of an average 2.1 percent on all credit-card transactions to the service provider. For debit cards, a 1.6 percent commission is imposed on each purchase.
The financial authorities have made efforts for years to lower the rates to ease the burden on small shop owners.