Starbucks boycott sparks anxiety for partner credit card firms

A growing boycott movement against Starbucks Korea, sparked by its "Tank Day" marketing, is creating anxiety for credit card companies that have partnered with the coffee giant. Card issuers are closely watching customer reactions, though significant card cancellations have not yet been reported.

Woori Card, which launched the "Star Travel Woori Card" in April, and Samsung Card, with its "Starbucks Samsung Card" since last September, are particularly attentive. Shinhan Card, which had planned to launch a co-branded Starbucks credit card this half, is now reconsidering the timing due to the ongoing controversy and internal system checks.

Starbucks Korea recently ended its long-standing exclusive partnership with Hyundai Card, opting to collaborate with multiple companies including Samsung Card. The current boycott has caught these new partners off guard, especially since co-branded credit cards, or PLCCs, create a symbiotic relationship where both the card company and the brand share risks and rewards. Unlike general co-branded cards that offer benefits across various merchants, PLCCs focus intensely on a single brand, making the card issuer vulnerable to any brand-related issues.

These cards typically concentrate on benefits like "Starbucks Star accumulation" and free drink rewards. Financial disclosures reveal that Starbucks Korea had approximately 168.5 billion won in "deferred revenue" related to unredeemed stars and free drinks last year, with a remaining balance of 26.7 billion won at year-end. This structure means that any boycott directly affects the card companies' marketing investments and potential revenue.

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PLCCs have a significant effect in attracting loyal customers of the partner brand, but they also involve large marketing costs and have a structural weakness where they share the full impact if a boycott occurs.