[비즈한국] BC Card, the first Korean financial company to export its card payment processing business, has entered its 10th year since launching its first joint venture. As one of the quickest Korean card issuers to venture into overseas markets, BC Card is now focusing its efforts on Central Asia, following its expansion into Southeast Asia. With overseas results still modest, attention is on whether CEO Choi Won-seok, who recently secured another term, will be able to present a welcome report card during his remaining tenure.
Expansion into Central Asia, Business Pace Remains Slow
BC Card entered international markets by building a Network-to-Network (N2N) cross-border payment system. Its approach involves partnering with state-owned banks or national payment operators, and sometimes acquiring local firms. In September 2015, BC Card signed an agreement to establish a joint venture for card processing with Indonesia’s state-owned bank, Bank Mandiri. This marked the first case of a Korean card company successfully exporting credit card payment processing.
Payment processing is a service that provides member companies with credit card authorization, infrastructure construction, terminal supply, and merchant network expansion. BC Card received official approval for the Indonesian joint venture in January 2016 and launched the entity in November of that year. In 2021, the company expanded into Vietnam by acquiring Wirecard Vietnam, a point-of-sale (POS) terminal operator, and grew its business the following year through a partnership with NAPAS, Vietnam’s national payment network operator.
Following its Southeast Asian venture, the company is now striving to break into Central Asia. This push began with Memorandums of Understanding (MOUs) signed in 2023 with state-owned banks and payment network operators in Mongolia (January), Kyrgyzstan (May), and Uzbekistan (July) to build payment infrastructure.
In August 2023, BC Card established "BCKG (BC CARD Kyrgyzstan LLC)," a joint venture with its VAN subsidiary Smartro and Kyrgyzstan's state-owned payment operator, IPC. BC Card holds a 52.5% stake, Smartro 17.5%, and IPC 30%. Unlike other overseas entities in China, Indonesia, and Vietnam—which are 100% owned subsidiaries—BC Card classifies the Kyrgyzstan entity as a joint venture.
The entry into Kyrgyzstan also drew the attention of both governments. In Kyrgyzstan, cash payments account for 95% of transactions, and only 3% of businesses have payment terminals installed. The Kyrgyz government, which was pushing for a digital transformation policy, collaborated actively with BC Card to build payment infrastructure. This aligned with the goals of Korean financial regulators, who were pushing for the global expansion and investment of domestic financial firms. Kim So-young, Vice Chairman of the Financial Services Commission and head of the 'Financial Internationalization Response Team,' personally attended the MOU signing to provide support to BC Card.
However, the Central Asian business is not picking up speed easily. The deal in Mongolia has remained at the MOU stage, and while a main contract was signed in Uzbekistan last August, services have not yet commenced. Whether a formal legal entity will be established in either country remains undecided. Currently, Kyrgyzstan is the only place where operations have begun, with the local entity opening on August 27, 2024. A BC Card official stated, "We are in discussions with the goal of launching operations in Uzbekistan within the year," adding, "We plan to expand our Central Asian business with the Kyrgyzstan entity as a base."
Will the Strategy for Revenue Diversification Bear Fruit?
Given this situation, it is expected to take considerable time before the Central Asian market yields results. The third-quarter net loss of the Kyrgyzstan entity increased from 200 million KRW in 2023 to 1 billion KRW in 2024, after operations began. According to corporate filings, BC Card has invested 8 billion KRW into the Kyrgyzstan entity. A BC Card representative stated, "This is not a business focused on immediate profits, but one with a long-term outlook."
Existing overseas entities have also struggled to produce stable profits due to high local market volatility. In the third quarter of 2024, the Chinese entity (BC Card Technology) and the Indonesian entity (PT Bccard Asia Pacific) succeeded in turning a profit year-on-year (China: -15.44 million KRW to 39.65 million KRW; Indonesia: -989.71 million KRW to 409.56 million KRW).
However, during the same period, the Vietnamese entity turned a loss (644 million KRW to -653.09 million KRW), recording a loss larger than the combined profits of the China and Indonesia entities. Furthermore, given that BC Card’s third-quarter operating profit was 116.7 billion KRW, the contribution of overseas subsidiaries remains minimal.
BC Card's push for overseas expansion is driven by the need to find new revenue streams. In recent years, major member companies like Woori Card, Kona I, and Jeonbuk Bank have left BC Card's payment network as they built their own or partnered with others. Noh Hyo-sun, a senior analyst at Korea Ratings, analyzed, "To counter the shrinking credit card processing sector, the company is expanding its business areas, including attracting new member firms, issuing its own cards, and engaging in lending, and this trend will likely accelerate."
Parent company KT030200 also holds strong interest. When announcing its entry into Central Asia, BC Card emphasized that it was part of the 'Global DIGICO' business pushed by KT. At an 'Indonesia Expansion Support Briefing' held by the Financial Supervisory Service in January 2023, BC Card CEO Choi Won-seok said, "We plan to expand our payment network by joining the KT Group’s commitment to global digital transformation," adding, "We will lead the way in pioneering a digital financial Silk Road connecting five Central Asian nations and ten ASEAN nations."
With CEO Choi Won-seok, who championed this revenue diversification strategy, successfully securing another term, attention is focused on whether his initiatives will bear fruit. Choi was recommended as the sole candidate by the Executive Recommendation Committee selecting the next CEO in December 2024. This marks his third consecutive term since his first appointment in February 2021. During his tenure, Choi has actively expanded the business into new areas such as proprietary card services, data operations, and the expansion of overseas payment networks.