“Prevent loss by installment payment of 5,999 won”… Shinhan Card ‘splitting restriction’ controversy Why?

“I will also file a complaint with the Financial Supervisory Service안전놀이터.”

At the end of June, online communities related to financial technology heated up with Shinhan Card’s ‘The More ‘ card. It was the start of Shinhan Card’s public announcement, “From July 1, restrictions on installment payment of communication and city gas charges by personal credit cards will be restricted.” In the meantime, TheMoa Card has provided a benefit of returning change of less than 1,000 won as points when paying more than 5,000 won, but some of them used this to pay telecommunications bills by dividing them into ‘5,999 won’ and making repeated payments . In this way, if you pay 60,000 won, you can get up to 9,990 won back.

Group complaints poured into TheMoa Card’s notice of ‘restriction on installment payment’. Shinhan Card eventually announced that it would temporarily suspend the measure, but it is in an atmosphere of suffering from excessive ‘cherry picking’. On the other hand, the financial authorities took issue with Shinhan Card’s product design.

According to the Credit Finance Association and others on the 4th, the number of complaints filed with seven full-time credit card companies (Shinhan, KB Kookmin, Hyundai, Samsung, Woori, Lotte, and Hana Card) in the second quarter of this year was 2,368, a 51.6% increase from the previous quarter (1,562) . . Among them, 1,369 cases, the majority, were Shinhan Card civil complaints, 3.5 times the number in the first quarter (392 cases). An official from the Financial Supervisory Service explained, “There have been many complaints about TheMoa card.”

In the meantime, TheMoa Card has been called a byword for ‘Chantech’. It became known that up to 16.7% of the card payment can be refunded as points when paying in installments of 5,999 won. Some users posted a ‘certified post’ on an online community saying, “I earn 2 million won per month thanks to The More Card.” Eventually, some self-employed people, including pharmacists, accumulated significant points by using this method to pay for wholesalers. Some self-service gas stations even informed customers to refrain from paying KRW 5,999 as the installment payment delayed customer waiting times .

Shinhan Card viewed some of these as ‘abnormal payments’. This is because it is a violation of the standard terms and conditions of credit card merchants to pay in installments for a transaction to be processed with a single sales slip. The credit card industry estimates that Shinhan Card’s losses from the ‘ splitting of 5,999 won’ will exceed 1 billion won per month. An official from Shinhan Card admitted, “The installment payment of telecommunications companies and city gas bills was an exceptional system for the vulnerable.”

Authorities judged differently. It is believed that the installment payment restriction unfairly infringes on consumer interests. Furthermore, it was pointed out that Shinhan Card was responsible for designing the product without properly checking the risk of ‘cherry picking’. An official from the Financial Supervisory Service said, “It is regrettable that Shinhan Card’s internal control system at the time of making TheMoa card worked meticulously.” From November, three years after the launch, additional services of TheMoa Card may change, but it is impossible without authorization from the authorities.

Some in the card industry argue that Shinhan Card provided excessive card benefits to increase its market share. Regarding this, a Shinhan Card official refuted, “At the time, the product was designed with the assumption that the card would be used within the scope of standard terms and conditions.”

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