COVID-19 accelerates digital payments adoption in South Korea
The country’s credit card issuers are seeing a rise in credit card use for online purchases.
The COVID-19 has accelerated digital payments and pushed up reduction in cash dependence in the already tech-savvy South Korea, according to data and analytics company GlobalData.
South Korea’s share of cash in overall transaction volumes is expected to decline to 37.2% by 2023, whilst non-cash payments will then account for two-thirds of total payment volumes.
Cash payments made up 45.1% of transactions in 2019, declining from 57.6% in 2015.
Already, the country’s major credit card issuers, such as Shinhan, Samsung, KB Kookmin, Hyundai, BC, Lotte, Woori, and Hana, are now witnessing a rise in credit card use for online purchases, according to GlobalData.
“The pandemic has triggered a fear of infection through handling of cash, pushing the adoption of electronic payments such as contactless cards and mobile wallets. The central bank is quarantining bank notes and even burning some to remove any traces of coronavirus to stem the outbreak, which is further pushing the uptake of electronic payments,” noted Nikhil Reddy, banking and payments analyst at GlobalData.
As a result, debit and credit card transactions will continue to grow, although it is likely to be hampered because of the overall decrease in consumer spending.
However, the decline in in-store payments will be partially offset by the rising e-commerce spending as wary consumers prefer buying online to avoid exposure to disease vectors such as cash and POS terminals.