The move paved the way for BC to enable Korean cardholders to use domestic credit cards to purchase goods and services abroad without paying services fees to global payment services providers, such as Visa and MasterCard.

The company said that BC Card CEO Chang Hyung-duk signed a contract with DFS Vice President Diane Offereins in Los Angeles on Sunday to form a business alliance for network sharing.

Established in 1986, DFS is a U.S. credit card firm and global network operator with franchises and ATM networks in 185 countries. It established a global network in 2007 by taking over Diners Club.

Under the contract, BC plans to issue the "BC Global Card" to replace current domestic cards through its member banks from the second half of this year when the firm is expected to complete the development of IT system with DFS.

"With the contract, BC cardholders will be able to use shops and stores franchised with Discover and Diners Club across the globe, while DFS cardholders can access BC Card franchises and domestic ATM services," a BC Card spokesman said.

"The alliance is a historic movement as it is a turning point for the local card industry to provide global payment services without reliance on global payment services providers," he added.

BC's global network is expected to provide a competitive edge for its member business partners as it will reduce fees associated with the issuance of international cards. Individuals will also benefit from the network thanks to an expected drop in fees for overseas card use.

Domestic card issuers, including BC Card, have long relied on global card firms' payment services networks for overseas transactions. Because of that, they are paying 0.03 to 0.04 percent in royalties for using the networks, while charging local cardholders a 1 percent fee for every transaction.

``Our vision to become a global payment services provider is taking shape. With the alliance, our customers will not have to pay fees for overseas use, while card firms can save on royalties that otherwise they would have to pay,'' Chang said.

The card issuer estimated that its global network will save up to 400 billion won over the next 10 years in services fees paid to global card giants such as VISA and MasterCard.

The move is in line with Korea emerging as the world's second-largest credit card market in terms of number of cards issued ― the market has expanded at an explosive pace over the past three years. As a result, Koreans held an average of 3.78 cards each as of August 2008, trailing only the U.S., where the average was 5.3 cards.