Last Year's Average Daily Credit Card Spending Decreases for the First Time in 16 Years... Contactless Payments Increase

Bank of Korea '2020 Payment Trends'
First Decline in Average Daily Credit Card Usage Since 1998, 2003, and 2004
Contactless Payments Approaching 40% Share

[Image source=AP Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] While non-face-to-face payments through mobile devices increased due to the impact of COVID-19, the scale of physical card payments has decreased. As consumer activity contracted, the average daily credit card usage amount turned to a decline last year. Previously, the credit card usage amount decreased compared to the previous year only three times: during the 1998 foreign exchange crisis (-9.1%), the 2003 card crisis (-22.2%), and 2004 (-26.8%).

According to the '2020 Payment Trends' released by the Bank of Korea on the 16th, the average daily non-face-to-face payment amount last year was 849 billion KRW, an increase of 16.9% compared to the same period the previous year. This non-face-to-face payment statistic includes not only non-face-to-face transactions such as online shopping mall payments but also payments made via mobile devices without contact with terminals at transaction sites.

During the same period, face-to-face payments (average daily 1.398 trillion KRW) decreased by 5.6%. Among face-to-face payments, mobile device payments increased by 13.3%, but plastic card payments decreased by 7.4%.

The proportion of non-face-to-face payments in total payments has continuously expanded, reaching 39.6% in the fourth quarter of last year, approaching 40%. While non-face-to-face payments were at about 32.2% in the first quarter of 2019, they rapidly increased to 36.4% in the first quarter of 2020 and 39.6% at the end of last year.

The share of simple payments among mobile device payments gradually increased from 32.4% in the first quarter of 2019 to 41.5% at the end of last year. The share of fintech companies in simple payments further expanded to 61.7% in the fourth quarter of last year. Simple payment services refer to services that store card information in advance on mobile devices and allow payments using simple authentication methods (such as password input or fingerprint recognition) during transactions.

Meanwhile, as consumer activity contracted due to the spread of COVID-19, the average daily card usage amount last year was 2.5 trillion KRW, with the growth rate sharply slowing from 5.8% to 0.6% in one year. Among these, the average daily credit card usage amount was 1.961 trillion KRW, turning to a 0.3% decrease. The decrease in credit card usage compared to the previous year occurred only three times: during the 1998 foreign exchange crisis (-9.1%), the 2003 card crisis (-22.2%), and 2004 (-26.8%). On the other hand, prepaid cards (+590.8%) increased sharply due to the use of emergency disaster relief funds.

Looking at the usage scale of personal credit cards by consumption type, industries such as e-commerce (+24.2%), automobiles (+20.6%), and furniture & home appliances (+6.3%) saw an increase in usage compared to the previous year, while most other industries decreased. In particular, travel (-66.0%), education (-17.1%), and restaurants (-14.3%) were significantly affected by COVID-19.

By region, except for the Seoul metropolitan area (+5.4%), all other regions saw a decrease in usage compared to the previous year. A Bank of Korea official explained, "Most large e-commerce companies such as online shopping malls are located in the Seoul metropolitan area, so the usage scale was relatively favorable. Excluding these companies, the usage turned to a 0.6% decrease."

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