Retailer Limits Gift Certificate Use

From August 24, the Kyobo Book Center and CGV started to set limitations on payments in gift cards issued by six gift coupon companies.

The two companies are to terminate their partnership with the six issuers from September.

As Kyobo Book Center and CGV, the biggest bookstore and cinema complex in Korea, are recording about 1 billion Won in monthly sales of gift cards and as the gift cards in question are among the most commonly used, the decision is expected to trigger domino effects.

According to the news reporters of Dong-A Ilbo on August 24, CGV and Kyobo Book Center held emergency meetings on August 22-23 where they decided to terminate their partnerships with gift card issuers and launch customer protection programs starting August 24.

As a result, CGV and Kyobo Book Center limited payments in gift cards by up to 10,000 (two gift cards worth 5,000 or one gift card worth 10,000) and 50,000 (one gift card worth 5,000 or ten gift cards worth 10,000) at a time, respectively.

The six gift cards are Culture Gift Card (issued by Korea Culture Promotion INC), Book and Culture Gift Card (issued by BookNLife), Happymoney Gift Card (issued by Happymoney), Starculture Gift Card (issued by Secutec), Pocketmoney Culture Gift Card (issued by Andamiro) and Education and Culture Gift Card (Korea Education and Culture Promotion).

CGV announced the decision on the billboard of its 36-cinema complex across the country, and Kyobo Book Center is planning to follow suit in its 13 stores.

The two companies decided that from September 1, they will not extend their contracts with the six issuers when they expire.

Kyobo Book Center, therefore, will stop transactions with five issuers, including Culture Gift Card, Book and Culture Gift Card Happymoney Gift Card, Starculture Gift Card (issued by Secutec), Culture Gift Card, from November 1 after its contracts with them all expire at the end of October.

The Pocketmoney Culture Gift Card cannot be used at CGV stores from September 1, Book and Culture Gift Card from September 7, Starculture Gift Card from March 1 of 2007, Culture Gift Card and Happymoney Gift Card from July 1, 2007.

CGV and Kyobo Book Center said, “With the ‘Sea Story’ scandal, all the gift cards issued by these coupon gift card companies are highly likely to be dishonored, which led to the decision to terminate our partnership.”

Naver and SK Communications, which operates Cyworld, are also considering terminating their partnership with the issuers.

jaykim@donga.com sunshade@donga.com