In a move towards a cashless society, South Korea has begun a trial whereby cash paying shoppers can receive their transactional change in the form of a credit deposited onto pre-paid payment cards, instead of coins.
The trial begins today following an announcement by the Bank of Korea last year detailing efforts to reduce the volume of circulating coins within the country. Customers at selected stores can choose to have the value of their transactional change coins deposited onto their prepaid cards, such as those used for the country’s transportation network.
With the value of South Korean coins being so low – the highest denomination is the ₩500 worth around US$0.45 – citizens reportedly deem them to be inconsequential.
The people of South Korea are technically savvy when it comes to non-cash payment methods such as mobile payments and online shopping, and they are among the highest users of credit cards in the world with each citizen owning a calculated 1.9 cards. Only 20% of South Korean payments are made using cash, according to the Bank of Korea.
Whilst the value of circulating South Korean coins – consisting of ₩10, ₩50, ₩100 and ₩500 denominations – is low, the cost of their production is comparatively high, i.e. the cost of making a 10 won coin is in fact reportedly more than 10 won. According to the Bank of Korea, 53.7 billion won (US $47.2m) was spent producing coins during 2016. There are also the associated cash-in-transit (CIT) and coin processing costs to consider. It is hoped that schemes such as that initiated today to reduce the volume of coins in circulation will subsequently reduce their associated costs.
According to a Bank of Korea survey, two-thirds of participants said they no longer carry coins, whilst half of those surveyed said that they supported plans for a cashless society.