Only one existing company has expressed its intention to participate in the notice to recruit an operator for the Seoul Sarang Gift Certificate, Seoul City's local gift certificate, for the three years from next year through 2028, according to reports on the 26th. In the two previous rounds of the public offering, several financial firms and big tech companies participated in consortiums.
There is talk that this is because the issuance volume of the Seoul Sarang Gift Certificate, which serves as the basis for the operator to earn "revenue," has been declining for the fourth year, and because there are not many additional benefits to be gained.
◇ Low participation in bidding to operate gift certificates… selection of operator delayed by more than a month
The Seoul Sarang Gift Certificate is a local gift certificate that can be used within Seoul. It consists of district gift certificates that can be used only within each autonomous district, metropolitan gift certificates that can be used in all 25 districts, and the E-Seoul Sarang Gift Certificate that can be used on specific online malls and "Seoul Delivery+."
Seoul City has recruited an operator responsible for the sale, payment, and settlement of these gift certificates on a two-year basis since 2021. Eligible operators are financial institutions and electronic financial businesses, and they must form a consortium.
In the first operator recruitment, the Shinhan consortium (Shinhan Card, Shinhan Bank, Tmoney Co., Kakao Pay), the Bizplay consortium (Woori Financial Group, KT, Webcash), and the NICE consortium (KB Financial Group, NICE Information & Communications) participated. The Shinhan consortium was selected as the first operator.
In 2023, multiple consortiums also vied to operate the gift certificates. The Bizplay consortium, selected as the preferred negotiating partner, won the operator role, and the Shinhan consortium was pushed to second place.
However, this year only one consortium is said to have expressed interest in participating. Seoul City conducted bidding from late September to the 16th of this month, but it reissued the notice and is accepting applications again until the 28th. That is because only the existing operator, the Bizplay consortium, participated in the bid.
As a result, Seoul City's schedule to select this year's operator of the Seoul Sarang Gift Certificate has also been disrupted. The city planned to select the preferred negotiating partner on the 22nd and sign an agreement on the 23rd. But due to low participation by companies, it was postponed to November.
A Seoul City official said, "If no additional participants emerge, we plan to convene an eligibility review committee for the current bidder, the existing operator, and decide whether to select it."
◇ "Operating local gift certificates brings little revenue and heavy operating burden"
The reason corporations have lost interest in operating the Seoul Sarang Gift Certificate is seen first as the reduction in issuance volume, which is directly tied to revenue. The operator receives an issuance fee of up to 0.92% of gift certificate sales. It can be reduced further during bidding.
However, the issuance volume of the Seoul Sarang Gift Certificate decreased for four consecutive years: 1.3841 trillion won in 2021, 1.3342 trillion won in 2022, 1.0671 trillion won in 2023, 1.0017 trillion won in 2024, and 942.6 billion won this year. The maximum revenue the operator can take from issuance fell from 12.7 billion won in 2021 to 8.6 billion won this year. In reality, it is less than that.
It also appears to be influenced by the fact that operators no longer enjoy the "benefits of monopoly" as they did in the past. In 2021, when the Shinhan consortium was operating, only Shinhan Card could be used to purchase the Seoul Sarang Gift Certificate by card. After the Bizplay consortium took over the operating rights, members of other card companies, including Hana, Samsung, KB Kookmin, and Hyundai, were able to buy the Seoul Sarang Gift Certificate. It has become harder for card companies to secure loyal customers.
There is also the possibility that bidders shied away due to technical issues arising during operations. In the past, payment errors occurred during the transition between operators, and the previous and new operators disputed who was responsible. An official at an IT company that participated in a past bid said, "Considering expenses such as platform maintenance and repairs, profitability falls far short of the investment," and noted, "If an error occurs during operations, it can only damage the company's image."