Increase in Card Payments for 'Online Shopping and Automobiles' and Decrease for 'Travel and Dining' Due to COVID-19

Card Payments Increase for 5 Consecutive Months Despite COVID-19 "Consumer Spending Recovery"
Financial Services Commission Analyzes Domestic Card Usage Performance in Q3 2020

[Asia Economy Reporter Kangwook Cho] Despite the prolonged COVID-19 pandemic, card payments have increased for five consecutive months, showing a recovery in consumer spending. In particular, card payments increased in online shopping and domestic new car sales, while card payments in sectors such as airlines and restaurants significantly decreased due to reduced outdoor activities.

Q3 Card Approvals Reach 228.4 Trillion KRW... Five Consecutive Months of Growth from May to September

According to the Financial Services Commission on the 29th, the domestic card approval amount in the third quarter of this year was 228.4 trillion KRW, up 5.4% compared to the same period last year. This also represents a 2.7% increase compared to the previous quarter.

Due to strengthened social distancing measures amid the spread of COVID-19, card approval amounts had been declining since March. However, since the distribution of emergency disaster relief funds in May, the amount has maintained an increasing trend through September.

The Financial Services Commission explained, "It is mainly estimated that this is due to the full-scale distribution of emergency disaster relief funds starting in May, which led to a recovery in consumer spending."

Increase in Online Shopping, Domestic New Car Sales, and Telecommunication Services

By industry, consumption related to online and indoor activities increased due to strengthened social distancing, while sectors directly related to dining out and travel continued to see sales declines.

In particular, non-face-to-face and online shopping, private car demand, and indoor activity-related sectors mainly showed growth.

Online shopping card sales amounted to approximately 45.8 trillion KRW, increasing by 22.7% (8.5 trillion KRW) compared to the same period last year, and were cited as the main cause of the increase in card approval amounts.

Card sales for domestic new car sales also reached 9.7 trillion KRW, up 41.2% compared to the same period last year. It is estimated that the increase in domestic car sales during the third quarter, due to the effect of new car sales, contributed to the rise in card sales.

Other sectors leading the increase in card sales included telecommunication services (+1.85 trillion KRW, 54.8%↑), supermarkets (+1.42 trillion KRW, 17.0%↑), home appliances (+0.54 trillion KRW, 16.8%↑), and general furniture (+0.16 trillion KRW, 21.6%). The increase is analyzed as resulting from increased use of telecommunication value-added services for indoor activities, increased household food consumption due to reduced dining out, and increased durable goods consumption such as home appliances and general furniture due to decreased consumer spending.

Decrease in Airline Services, General Restaurants, and Public Transportation

The decrease in consumer spending was mainly identified in sectors related to reduced domestic and international travel, general restaurants, and public transportation due to social distancing.

Due to the decline in domestic and international travel demand, airline card sales dropped sharply by 81.2% compared to the same period last year, amounting to approximately 470 billion KRW. Card sales at duty-free shops, a major sector directly related to travel demand, also shrank to about half compared to the same period last year.

Due to reduced outdoor activities, card sales at general restaurants recorded 26.9 trillion KRW, down 8.4% compared to the same period last year. Other sectors closely related to outdoor activities, such as academies (-0.45 trillion KRW, 13.9%↓) and lodging (-0.36 trillion KRW, 19.7%↓), also showed a declining trend.

This content was produced with the assistance of AI translation services.