Nearly half of the South Korean government’s emergency disaster relief funds were distributed by two major credit card issuers, Shinhan Card and KB Kookmin Card, according to news reports on Tuesday.
The government started receiving applications for the relief program from May 11, doling out the funds from May 13, in the form of cash, prepaid cards or money-like points that can be used with credit or debit cards.
The total relief funds provided to coronavirus-hit households exceeded 12 trillion won ($9.7 billion) as of Sunday, including 5.7 trillion won distributed via credit card firms.
Among the credit card companies, Shinhan Card and KB Kookmin Card, in particular, were two of the most favorite card issuers distributing relief credit worth around 2.74 trillion won. Shinhan and KB Kookmin accounted for 25.5 percent and 22.5 percent of the 5.7 trillion won handouts, respectively.
Since the use of the relief funds via credit cards can help boost credit card companies’ sales, local card issuers have been competing with each other to lure consumers during the aid program, although any form of promotional event has been banned.
“The companies that run both banking and credit card businesses, like Shinhan and KB Kookmin, may have had an upper hand to attract consumers as they can allow people to choose between a credit and debit card when receiving the points,” an industry source in the financial sector said.
As a result, Samsung Card, Hyundai Card and Lotte Card, which do not have banking business units, appear to be losing ground to their rivals. Samsung Card, for instance, once accounted for 16 percent of the total funds handed out by the credit card companies, but the figure fell to 14.5 percent recently. Hyundai and Lotte took up 2.5 percent each.
The application period is scheduled to end on June 5 while households can spend the funds until August.
Of 21.7 million households eligible for the application, nearly 95 percent have received the handouts as of Tuesday, according to the Ministry of the Interior and Safety.
By Kim Young-won (firstname.lastname@example.org