April 19, 2024

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[THE INVESTOR] South Korea’s central bank said it will carry out a test project in the first half of next year to reduce the use of coins.

The Bank of Korea said it will select convenience stores and prepaid card companies by January in an initial test to encourage those who spend with cash at convenience stores to use their loose change to charge prepaid cards such as transportation cards. 

“We will shortly release the notice about the test project and get applications from convenience stores. We will be able to make the selection by as late as January,” Yoon Jae-ho, BOK’s manager at the e-finance planning team said.

Transportation cards can already be topped up at convenience stores and consumers will be able to easily adapt to using coins for the service, the BOK said.

If the test goes smoothly and proves to be effective, the BOK will expand the service to retailers such as supermarkets and pharmacies, and allow the remittance of loose change to bank accounts in 2018.

“We plan to discuss the matter with the banking industry in the second half of next year,” Yoon said.

The BOK aims to make Korea completely coinless by 2020 to cut the costs of minting coins and reduce consumer inconvenience.

According to a recent survey by the BOK, 63 percent of the respondents said they do not use coins because it is inconvenient to carry them around. Slightly over half of the respondents said they prefer going coinless, while another 24 percent said the opposite.

Twenty-nine percent of respondents said they used cash mainly at street vendors, followed by convenience stores (24 percent) and traditional markets (22 percent). Fifty-seven percent of those surveyed also used cash for small payments, while 20 percent said it was out of convenience and 12 percent said it was due to unavailability of cards.

The largest proportion of respondents, 41 percent, said they preferred bank accounts as the destination for the remittance of coins, followed by prepaid cards at 33 percent and cash credit at 20 percent.

By Kim Yoon-mi/The Korea Herald (yoonmi@heraldcorp.com)