Promotion vs Withdrawal 'Party-Government Conflict'... Credit Card Cashback TF Stuck in Place (Comprehensive)

Card Cashback Policy's Future Questioned
In Limbo and Temporarily Paused
Some Say "Implementation This Year Seems Difficult"

Yoon Ho-jung, the floor leader of the Democratic Party of Korea, is delivering opening remarks at the '2021 2nd Supplementary Budget Party-Government Meeting' held at the National Assembly Members' Office Building on the 29th. Photo by Yoon Dong-ju doso7@

[Asia Economy Reporter Ki Ha-young] As the government and the ruling party clash over the scope and scale of disaster relief payments, the task force (TF) operating to distribute the Win-Win Consumption Support Fund (credit card cashback) is also at a loss.

According to the industry on the 14th, the TF, which includes the government, the Credit Finance Association, and credit card companies to build the credit card cashback payment system, is currently on pause. Although several meetings were held after the kickoff meeting, further discussions have become difficult due to significant disagreements between the ruling party and the government regarding disaster relief payments.

On the previous day, the Democratic Party of Korea decided to push for a party resolution to expand the disaster relief payment target from the bottom 80% income bracket to 100%, effectively implementing a 'nationwide disaster relief payment,' and to scrap the credit card cashback policy. However, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, maintained his stance that disaster relief payments should be given to the bottom 80% income bracket and that the credit card cashback is necessary.

Initially, the government included a budget of 1.1 trillion won for the Win-Win Consumption Support Fund in the second supplementary budget bill submitted to the National Assembly as part of measures to revive domestic consumption. This fund offers a 10% refund on the amount spent exceeding a 3% increase compared to the average monthly card usage in the second quarter. The cashback limit is 300,000 won per person, with a maximum refund of 100,000 won per month. Spending at department stores, large supermarkets, online shopping malls, luxury specialty stores, entertainment establishments, and automobile purchases are excluded.

Watching the Supplementary Budget Situation... But Progress Seems Difficult

As the continuation of the credit card cashback policy is being questioned, there are forecasts that the TF assembled to build the credit card cashback payment system will find it difficult to continue operating. The card industry explains that since this is a government-led initiative, they are preparing without disruption while monitoring the passage of the supplementary budget, but the general assessment in the market is that proceeding with the project as planned will be challenging.

A financial sector official said, "The ruling party and government have failed to narrow the gap over disaster relief payments in the supplementary budget, making discussions on promoting credit card cashback itself difficult," adding, "With the recent rapid spread of COVID-19, it is uncertain when consumption stimulus measures like credit card cashback can be implemented."

Some expect that the credit card cashback policy will be difficult to implement this year. This is because it is unclear when the ongoing COVID-19 surge will subside, and there have been many criticisms regarding the effectiveness of the credit card cashback policy from the start. Excluding online and large supermarket spending from cashback eligibility is a representative issue.

Another financial sector official said, "From the early discussions of the credit card cashback policy, there were criticisms questioning who would spend 1 million won just to receive a 100,000 won cashback, even if the policy targeted consumption stimulation among higher-income groups," adding, "The plan was to resolve such issues through discussions and implement the policy without a concrete roadmap, but there is not enough time to supplement and implement it within this year."

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