CARDS & PAYMENTS | Staff Reporter, Korea

Card payments growth slows in South Korea

Consumer spending fluctuated amidst waves of new coronavirus cases.

Card payments in South Korea grew at as lower pace in the first nine months of 2020 compared to last year as consumer spending remained tepid amidst the pandemic, reports Yonhap News Agency, based on data from the Bank of Korea (BOK).

Spending made with credit, debit and prepaid cards reached a daily average of US$2.2b (KRW2.5t) in the first three quarters of the year, or up only 1.4% from the same period in 2019.

This is more sluggish than the 5.3% YoY growth recorded from January-September 2019 compared to the same period in 2018.

The central bank noted that people refrained from visiting offline stores amidst the COVID-19 pandemic, leading to the slowdown in growth.

Also Read: South Koreans in 20s face $1.91b in overdrafts, card loans

The surge in coronavirus cases led to a drop in card spending in March and April, when the country bore the brunt of the first wave of the COVID-19 pandemic. It once again slowed in August compared to the previous month with the second wave of new coronavirus cases.

However, there was a noted increase in the use of contact-free cards, with spending by this method rising 17% YoY to an average of $703.54m (KRW800b) daily.
In contrast, card payments made during face-to-face transactions fell 3.7% to $1.23b (KRW1.4t) per day, central bank data revealed.

Also Read: COVID-19 accelerates digital payments adoption in South Korea

By segment, credit card spending inched up 0.2% YoY in the January-September period, whilst payments associated with debt cards rose 2.4%.

Meanwhile, the use of prepaid cards jumped 770.6% over the same period, largely because of state allowances and emergency relief aids provided in such a form, the BOK said.

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