23 Jun, 2020 South Korea to see rise in card payments amid COVID-19 pandemic, says GlobalDataPosted in Banking
Electronic payments, in particular card payments, have been on a sustained growth curve for the last few years in South Korea, which is among the few countries globally that have been successful in combating the COVID-19 outbreak. With the government now easing lockdown restrictions, a rise in consumer and commercial spending is expected to further drive card payments in the country, according to GlobalData, a leading data and analytics company.
An analysis of GlobalData’s Payment Cards Analytics reveals that card payments value is expected to grow at a compound annual growth rate (CAGR) of 4.3% from KRW913.3 trillion (US$791.0bn) in 2019 to KRW1,127.8 trillion (US$976.8bn) in 2024 while ATM cash withdrawals are set to decline at a CAGR of -3% during the same period.
Sowmya Kulkarni, Banking and Payments Senior Analyst at GlobalData, comments: “When shopping in-store, consumers are shifting from cash to card payments, particularly contactless cards to avoid exposure to disease vectors. Even for online purchases, cards are the most preferred mode of payments in South Korea. A potential rise in non-essential purchases such as travelling and dining due to easing of lockdown restrictions will further support growth in card payments.”
To boost consumer spending, the South Korean government provided emergency payout of up to KRW1m (US$866.14) to South Korean households. The amount is credited to households’ credit card accounts in the form of points, which can be used for payments at select merchants, and not for personal savings.
Ms Kulkarni concludes: “South Korea is a well-developed payment market with robust payment infrastructure and high consumer preference for electronic payments. While the COVID-19 pandemic and the uncertainty associated with it has somewhat derailed card market growth, the easing of restrictions and gradual start of business activities will drive its growth trajectory.”