Why South Korea cards squeeze cash payments

GlobalData says bank access and merchant acceptance are keeping electronic transactions ahead.

South Korea’s card payments market is expected to maintain strong growth in the coming years, supported by widespread access to banking services, a well-developed payments infrastructure and continued consumer preference for electronic transactions.

Data from GlobalData’s Payment Cards Analytics showed that the total value of card payments in South Korea has grown strongly over the past five years. 

The market has shifted from rapid adoption-led expansion to a more stable growth phase, supported by increasing point-of-sale (POS) terminal penetration, rising e-commerce activity and competition from digital-only banks.

Ravi Sharma, lead banking and payments analyst at GlobalData, said the outlook for card payments remains positive due to the country’s highly banked population, broad merchant acceptance and growing consumer comfort with electronic payments. 

He noted that whilst geopolitical and economic challenges could create short-term volatility, the long-term shift away from cash is expected to continue.

Debit card usage is being supported by digital-only banks such as KakaoBank, Kbank and Toss Bank, which offer low-cost and easy-to-use financial services. 

Kbank, which serves around 16 million customers, provides debit cards alongside its basic bank accounts, helping drive everyday usage.

Credit and charge cards continue to account for the largest share of card payment transaction volumes and values. 

Consumers favour these products because of rewards programmes, cashback offers, instalment payment options, flexible repayment terms and widespread merchant acceptance.

GlobalData expects South Korea’s card payments market to continue expanding, supported by sustained consumer demand for digital payments, ongoing innovation in payment services and a strong payments infrastructure. 

Although factors such as energy price fluctuations and global trade disruptions could affect consumer spending in the short term, the overall growth trend is expected to remain positive.