Card Companies Scale Back Marketing as Exchange Rate Hits 1560 Won

As the won-dollar exchange rate surpassed 1560 won, reaching its highest level in 17 years, card companies are reducing their marketing efforts related to overseas direct purchases. The high exchange rate has dampened demand for these purchases, and increased volatility has raised the costs of related promotions.

According to the financial sector and the Bank of Korea, the amount of online shopping overseas direct purchases by domestic residents in the first quarter of this year totaled $1.35 billion. This marks a 13.1% decrease from the previous quarter's $1.55 billion. Even when considering seasonal factors that typically boost shopping demand at year-end, the figure remains unchanged compared to the same period last year, which also saw $1.35 billion.

This decline is attributed to the soaring exchange rate, which has reduced demand for overseas direct purchases. The average monthly exchange rate for the dollar against the won rose steadily from 1456.51 won in January to 1490.11 won in May, with a peak of 1561.5 won recorded on June 6, the highest since the global financial crisis in 2009. Although the rate has since decreased to around 1530 won following verbal interventions from authorities, it remains elevated.

Consumers engaged in overseas direct purchases are now facing higher costs for the same products compared to the past. Many online communities and social media platforms have seen posts from individuals postponing their purchases due to the high exchange rate. One individual considering buying an e-reader expressed, "Even with discounts, it's hard to commit to a purchase because of the exchange rate."

In response to these trends, card companies are scaling back their marketing efforts. Previously, they competed to attract customers by offering various benefits such as exchange rate discounts, overseas transaction discounts, and shipping fee waivers, leveraging the fact that overseas direct purchases were primarily made through credit card payments. The overseas direct purchase market surged during the COVID-19 pandemic, making these transactions a significant revenue source for card companies. However, as the exchange rate rises, the costs of related promotions have also increased, making aggressive marketing less feasible.

Currently, major card companies are not launching new marketing initiatives for overseas direct purchases. KB Kookmin Card is the only exception, having introduced the 'KB NEED Global Card' on June 1, which offers a 3.5% discount on charges for transactions at overseas merchants. A representative from the card industry stated, "With the exchange rate exceeding 1500 won, demand for overseas direct purchases is bound to decline. Given the expectation of continued high exchange rates, it will be challenging for card companies to engage in marketing related to overseas direct purchases for the foreseeable future."