These are busy days on the Korean peninsula. Security concerns are still focused on North Korea. In South Korea, a presidential election is less than three weeks away. The country is also starting an ambitious experiment this week—having to do with loose change. HPR’s Bill Dorman explains in today’s Asia Minute.
South Korea’s central bank wants to cut down on coins.
The Bank of Korea has calculated that it spends about 50 million dollars a year to produce coins, and officials have launched a pilot program to see if they can be phased out.
The grand experiment starts with convenience stores across the country…more than 23,000 of them.
Starting today, if you make a purchase with cash, you can convert your change to rewards points, or you can put it on a transit card. Those transit cards have soared in popularity across Asia — from the “U-Pass” in Seoul to Tokyo’s “Passmo” and “Suica” systems and Hong Kong’s “Octopus card.”
The head of the Bank of Korea’s payment and settlement systems department says another option under consideration is arranging a direct payment to a customer’s bank account. The use of cash is already on the decline in South Korea.
Last year was a bit of a landmark, the central bank reports credit card transactions made up about 40 percent of all purchases—outpacing cash transactions for the first time.
The remainder was made up using debit cards.
This pilot program on coin replacement is scheduled to last through 2019.
Then the central bank will decide whether to expand it to drug stores and South Korea’s traditional open-air markets.