If You Spend Over 3% More on Your Card in October Compared to the April-June Average, Get 10% Cashback

If usage exceeds 3%, a maximum refund of 100,000 KRW per person per month is available

[Image source=Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] The government plans to implement the 'Win-Win Consumption Support Fund (Card Cashback)' in October, which refunds 10% of the amount spent exceeding 3% more than the average monthly usage in the second quarter, up to 100,000 KRW per person per month, for credit and debit card usage. This measure was prepared to stimulate consumption weakened by the fourth wave of COVID-19 and to particularly encourage the consumption effect to flow to small business owners and local markets.

For example, if a person spent an average of 1,000,000 KRW per month on all their credit and debit cards (excluding corporate cards) in the second quarter (April to June), and spends 1,530,000 KRW in October, they will receive 50,000 KRW, which is 10% of the 500,000 KRW exceeding 1,030,000 KRW. The condition of 'exceeding 3%' was set to exclude natural increases unrelated to consumption incentives.

To encourage consumption in local markets, spending in certain sectors and items such as department stores, large supermarkets, online shopping malls, luxury specialty stores, and entertainment bars will not be recognized as consumption performance. However, the government is considering recognizing consumption through delivery apps among online transactions and is reviewing technical aspects. It is reported that if customers do not register their cards directly on delivery apps and use simple payment methods, card companies have difficulty identifying these as delivery app consumption. Spending at corporate supermarkets will also be recognized as consumption performance.

The cashback limit is 100,000 KRW per person per month. If implemented for two months as planned by the government, a maximum of 200,000 KRW can be received.

A Ministry of Economy and Finance official said on the 29th, "The implementation period is based on two months, but it may be adjusted depending on the speed of fund execution. It could end sooner or last longer."

The budget for the Win-Win Consumption Support Fund is 700 billion KRW. When the government first drafted the second supplementary budget, it allocated 1.1 trillion KRW for three months, but this was reduced to 700 billion KRW during the National Assembly discussions.

The government is building a system where if citizens designate a dedicated card company per individual, the card company can check the user's total monthly credit and debit card usage and provide the cashback the following month. Individuals can also check their accumulated eligible consumption amount in real time. The cashback provided per individual is designed to be deducted first when using the card. It can be used almost like cash anywhere without special usage restrictions.

Whether to set an age limit for cashback support and what that limit should be has not yet been decided. Currently, debit cards can be issued from age 12, but those aged 12 to 13 require a legal guardian to apply. Inclusion of foreigners in the support target is also under consideration.

The government holds the position that consumption stimulation measures are necessary to prevent permanent damage to consumption capacity caused by COVID-19 and to draw out consumption capacity from high-income groups. Amid ongoing uncertainties related to domestic demand due to the fourth wave of COVID-19, the Consumer Confidence Index (CCSI) in August was 102.5, down from 103.2 in July and 110.3 in June. Although domestic card approval amounts in July increased by 7.9% compared to a year earlier, the increase was mainly attributed to sales growth in department stores, discount stores, and online sectors.

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