Program runs July through December
Targets small business owners with annual sales under 300 million won
Hana Card said Monday it will introduce a maximum interest rate cap of 12 percent per year on card loans and credit loans — the first such voluntary ceiling among non-bank financial institutions in South Korea. The self-imposed cap sits well below the legal maximum of 20 percent per year and is aimed at easing the financial burden on vulnerable borrowers.
The cap applies to small business owners and self-employed merchants with annual sales of 300 million won ($194,000) or less.
Card loan rates at card companies currently range from 8.32 to 19.00 percent per year, according to data published by the Credit Finance Association in May, while credit loan rates at specialized credit finance companies run from 9.43 to 19.90 percent. By capping its rate at 12 percent, Hana Card said low- and mid-credit borrowers previously exposed to high interest costs could see their rates cut by as much as 7 percentage points or more.
The program will apply on a temporary basis to card loans and credit loans newly issued from July through the end of December.
"Hana Card believes that finance should be more than a simple transaction — it should be a warm connection between people," said Seong Yeong-su, chief executive of Hana Card. "This interest rate cap reflects our firm commitment to growing alongside the small business owners and self-employed merchants who quietly hold their ground even in difficult times."
Seong added that Hana Card would continue to fulfill its responsibilities to ensure that the financial benefits generated through the industry are returned as real gains to all consumers, including the most vulnerable.
Meanwhile, Hana Card in February launched an early payment program for about 2 million small merchants, moving the settlement date for card sales proceeds from the next business day to the same day. The company said the initiative will accelerate the disbursement of 12 trillion won in sales proceeds this year, helping merchants manage cash flow as part of its inclusive finance efforts.
won@heraldcorp.com
