Era of Mobile Card
According to a report “Payment Trend in First Half of 2017” release by the Bank of Korea (BOK) on September 5, the average daily spending of all payment methods, excluding cash, stood at 391.5 trillion won (US$345.66 billion) in the first half of this year, up 4.7 percent from the same period a year ago.
The amount of transactions processed through credit and debit cards in the January-June period came to 402 trillion won (US$354.94 billion), 2.2 trillion won (US$1.94 billion) a day on average, up 9.3 percent from year earlier.
As an increasing number of consumers use their credit cards while shopping online, the amount of transactions processed through credit cards stood at 1.8 trillion won (US$1.59 billion) a day on average, up 8.3 percent.
In particular, the average daily spending of mobile credit cards grew 41.2 percent as a growing number of consumers have been using smartphones to buy things online, instead of personal computers, after 2016. Consumers can use mobile credit cards after installing mobile credit card apps on their smartphones and registering actual credit cards issued offline.
The amount of transactions processed through individuals’ credit cards significantly rose mainly in online shopping and home shopping with 32.4 percent, airliners with 24 percent and gas stations with 13.9 percent.
The spending of credit cards increased as mobile-based online shopping went up 37 percent and the number of outbound tourists grew 18.7 percent in the first half of this year. It was also partially due to the fact that the price of gasoline and diesel rose 8.3 percent and 12.2 percent, respectively.
The amount of transactions processed through debit cards increased 13.3 percent, showing a two-digit growth for two years in a row. Industry watchers say that more and more consumers are using debit cards as debit cards five higher tax benefits than credit cards but provide additional services similar with credit cards. The rate of income deduction of debits cards is 30 percent when calculating earned income taxes at the end of the year, which is two times higher than credit cards with 15 percent. Accordingly, debit cards account for 20.6 percent of the total transactions in the first half of 2017, showing a continuous growth.
The number of debit card issuance was also higher than that of credit cards. As of the end of the first half of this year, 97.49 million credit cards were issued, up 1.9 percent from a year ago, while 122.66 million debit cards were issued, up 2.2 percent.
The number of average daily payment of credit and debit cards amounted to 31.29 million and 19.38 million in the first half of 2017, up 13.8 percent and 16.7 percent, respectively.
The amount of transactions per payment is decreasing. As an increasing number of consumers is using cards at convenience stores, markets and public transportation, replacing cash, the amount of transactions per payment is falling. The average amount of credit and debit cards per payment were 44,395 won (US$39.20) and 23,642 won (US$20.88), down 1.2 percent and 2.9 percent, respectively, compared to the same period a year earlier.