Hyundai Card and Shinhan Card have decided to reduce transactions related to purchasing-only cards, which are 'corporate credit cards.' Following the implications of the Homeplus incident, the focus seems to be on maintaining soundness.
According to industry sources on the 26th, Hyundai Card, which ranks first in transaction amounts for purchasing-only cards, has decided to reduce transactions related to purchasing-only cards for low-credit corporations. Measures such as reducing limits or restricting new issuances are likely.
Shinhan Card, which ranks third in transaction amounts, recently suspended the issuance of purchasing-only cards for distributors. It is reported that there are no plans for further expansion. Lotte Card, which ranks second in transaction amounts, stated that it is closely monitoring the situation.
Purchasing-only cards are credit and debit cards issued by purchasing corporations to pay for purchases. The card company pays the purchase amounts to the vendors in cash for transactions made with the card, and later the purchasing corporation deposits the amounts, along with fees, back to the card company at maturity. It is a type of credit transaction through cards.
From the perspective of the card company, while the fees do not greatly contribute to profitability, it allows for an expansion of transaction assets. However, the risks associated with purchasing-only cards have been highlighted due to the recent management controversy surrounding Homeplus, suggesting a shift in the card companies' strategies.
Since early 2020, Homeplus has entered into agreements to utilize purchasing-only cards with major credit card companies such as Hyundai Card, Lotte Card, and Shinhan Card, paying for goods from some partner companies. When Homeplus uses purchasing-only cards to purchase partners' goods on credit, the card company provides the purchase amounts to the partners in cash. At this time, the card company retains Homeplus's accounts receivable.
To secure cash, the card company converted some of these accounts receivable into cash through a securities company. The securities company issued bonds using these receivables as underlying assets and sold them to general investors. Subsequently, when Homeplus pays the card usage fees, a structure is in place to pay back investors with principal and interest.
However, as Homeplus, which fell into management difficulties, was unable to pay card debts, these bond investors incurred losses. The estimated loss amount is about 430 billion won.
If the card companies had not liquidated the Homeplus purchasing-only card accounts receivable through the securities companies, they could have borne the entire loss. As the number of corporations facing management difficulties has increased due to a recent economic downturn, card companies have started reducing operations while keeping the potential for purchasing-only card defaults in mind.
In the credit rating industry, it is reported that a trend is forming to classify purchasing-only card payment assets as risky assets amid and surrounding the issues related to Homeplus.
A source in the credit industry noted, 'As the risks of purchasing-only cards are highlighted across the market, it seems that each company is reducing issuances according to their internal strategies.'