Korea’s overseas credit card spending up 41% in 2023

South Korea’s overseas credit card spending rose by nearly 5 trillion won ($3.8 billion) last year from a year ago amid growing demand for overseas travel and online direct shopping.

According to the Credit Finance Association on Sunday, overseas credit card spending at 10 Korean credit card companies stood at 16.85 trillion won in 2023, up 41 percent from the previous year’s 11.9 trillion won.

The spending more than doubled from two years ago when the amount stood at 8.3 trillion won.

This explosive increase in overseas credit card spending is attributed to the recovery of overseas travel demand following the end of the Covid-19 pandemic.

According to Korean tourism statistics, the cumulative number of overseas travelers hit 22.7 million in 2023, about 3.5 times higher than the 6.6 million in 2022.

The increase in overseas online shopping by Korean consumers also contributed to the growth of credit card overseas payment.

According to Statistics Korea, online cross-border payments amounted to 6.76 trillion won in 2023, up 27 percent from the previous year.

The amount, which was 4.67 trillion won in 2020, topped 5 trillion won in 2021 and has shown a steep growth trajectory every year since.

The rapid increase in overseas payment is also due to the increase in overseas online shopping malls that sell not only luxury goods and clothing but also various daily necessities that are cheaper than in Korea, according to industry observers.

Korean credit card companies, in the meantime, are stepping up efforts to capture the demand for cross-border payments with a variety of card products.

In the past, card companies focused on offering airline mileage accumulation or memberships to global hotel chains, but they are now competing for a wider range of benefits, such as free currency exchange, free overseas payment and withdrawal fees, and discounts on overseas payments.

The most popular trend in the overseas payment market is free currency exchange.

Hana Card Co.’s Travelog debit card and fintech startup TravelWallet’s TravelPay offer 100 percent fee exemption for major currency exchanges.

Shinhan Card Co. also launched the SOL Travel Check Card last week, which offers a 100 percent discount on exchange fees for 30 currencies worldwide and exempts overseas payment and ATM withdrawal fees, along with discounts at major overseas merchants.

Lotte Card Co. unveiled the Trip to LOCA Pani Bottle Edition, an upgraded version of its existing card in January. To commemorate the launch, the company will provide an unlimited 5 percent discount at overseas merchants until the end of March and 3.5 percent discount until the end of June.

Woori Card Co.’s travel Wallet accumulates 2 percent of overseas payments. Woori Card also launched a new card, Every Mile SkyPass, which accrues 2 Korean Air miles for every 1,000 won spent overseas and waives overseas usage fees.