Hyundai Card is scaling back benefits offered at convenience stores. As the need for profitability management grows due to reduced merchant fees and increased procurement costs, the company is adjusting its strategy by modifying existing partnerships while expanding into new consumer areas.
According to the card industry on July 30, Hyundai Card will reduce the M-point usage rate from 20% to 10% for major convenience stores in South Korea, including GS25, CU, 7-Eleven, and Emart24, starting August 10. This marks the first adjustment to benefits since the partnership with the convenience store sector began nearly a decade ago in 2014.
The adjustment of M-point benefits is seen as part of a strategy to balance cost management with expanded marketing efforts. A Hyundai Card representative explained that the changes in convenience store benefits aim to enhance customers' M-point usage experience by flexibly expanding usage locations and adjusting rates.
Hyundai Card has been aggressive in marketing, pioneering the private label credit card (PLCC) market and being the only domestic card issuer to introduce Apple Pay. As a result, it has spent the most on advertising in the card industry from the third quarter of 2019 to the third quarter of last year.
Recently, the company launched the 'Alphabet Card,' broadening benefits across lifestyle areas such as beauty, easy payments, subscriptions, dining, and travel, intensifying competition with top card issuers. As of the end of the first half of this year, Hyundai Card ranked third in personal credit sales, following Shinhan Card and Samsung Card.
Card points, interest-free installments, and billing discounts are key marketing tools for attracting customers, but they also represent significant marketing costs for card issuers. Industry insiders believe that in light of the profitability pressures facing the card industry due to reduced merchant fees and rising procurement costs, it is inevitable to adjust benefits for existing partners while expanding new usage locations.
Convenience stores are a major sector with high consumer usage frequency. According to the National Data Agency, convenience store sales reached 2.88 trillion won in May, a 5.6% increase compared to the same month last year, surpassing the sales of large supermarkets (2.80 trillion won). Given that card payments are frequently made in this sector, the impact of the benefit adjustments on consumers is expected to be significant.
An industry source noted, "Since points and rewards are reflected as costs for card issuers, they likely considered profitability. With the recent expansion of various consumer channels, it seems there is also a strategy to diversify benefits that were previously concentrated in certain sectors across multiple usage locations."
* This article has been translated by AI.
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