South Korea to introduce deposit-backed credit cards and new industry guidelines

South Korean financial authorities are introducing new measures to expand credit access and improve consumer protection in the credit card market. The Financial Services Commission plans to launch deposit-backed credit cards by December. This system allows individuals with limited financial histories, such as university students and foreign residents, to obtain credit cards by providing a security deposit. This mechanism is intended to serve as a ‘credit ladder,’ helping users build legitimate credit scores through regular repayments while minimizing default risks for card issuers.

Separately, the Financial Supervisory Service is developing comprehensive guidelines for the entire lifecycle of credit and check card products. This move follows controversy surrounding Hyundai Card, which issued approximately 702,000 replacement cards for discontinued products under a ‘tacit consent’ model. Critics noted that some replacement cards offered inferior benefits compared to the original products. The new guidelines aim to establish strict criteria for determining product similarity and regulating the use of tacit consent to ensure consumer rights are protected during card replacements.