Slowing Growth in Card Payments in the First Half of the Year... Impact of Reduced Pandemic Base Effect

8.4% Increase Compared to First Half of Last Year
Daily Card Usage Amounts to 3.3 Trillion Won
Trend of Increasing Mobile Device Contact Method in Face-to-Face Payments

The growth rate of card payments in the first half of this year slowed down due to the reduction of the pandemic base effect. The growth rate of payment card transaction amounts, which had exceeded 10% year-on-year every half-year since the second half of 2021 due to the COVID-19 base effect, dropped to 8.4% in the first half of this year.

According to the "2023 First Half Domestic Payment Trends" announced by the Bank of Korea on the 21st, the average daily usage amount of payment cards such as credit and debit cards in the first half of this year was 33 trillion KRW. Although this amount increased by 8.4% compared to the same period last year, the growth rate was lower than the 12.4% recorded in the first half of last year. A Bank of Korea official explained, "Consumption that was delayed due to COVID-19 increased significantly in the first half of last year due to the easing of quarantine measures," adding, "As time has passed since the easing of quarantine measures, the base effect has diminished."

By type of payment card, both credit cards (8.8%) and debit cards (7.7%) saw an increase in usage scale, with the proportion of credit cards within payment cards expanding. This was influenced by the continued decline in prepaid card usage following the end of disaster relief fund payments during the COVID-19 period.

The increase in face-to-face payment amounts (provisional daily average of 18 trillion KRW) was 11% year-on-year, while non-face-to-face payments increased by 4.2%. Due to the impact of COVID-19, the proportion of face-to-face payments in total transactions steadily decreased from 66.0% in 2019, 61.2% in 2020, to 59.2% in 2021, but reversed to an increase at 59.9% last year following the easing of quarantine measures.

Payments made using mobile devices and others increased by 11.9%, showing a larger growth compared to payments using physical cards (4.7%). The share of such payments in total transactions has steadily increased from 44.1% in 2020, 59.2% in 2021, 48.5% in the first half of 2022, 48.3% in the second half of 2022, to 50.2% in the first half of this year. A Bank of Korea official explained, "Not only in non-face-to-face but also in face-to-face payment processes, the use of mobile devices for contact-based payments is gradually increasing."

By authentication method, payments through mobile devices and others (daily average of 15 trillion KRW) saw an increase in the proportion of card-based simple payment services, accounting for 46.9% due to preferences for convenience.

Card-based simple payment services refer to services where card information is pre-stored on mobile devices, and payments are made using simple authentication methods (password input, fingerprint recognition) during transactions. This proportion steadily increased from 43.3% in 2021, 45.2% in the first half of last year, 47.4% in the second half of last year, but slightly decreased to 46.9% in the first half of this year.

Additionally, the proportion of card-based simple payment services provided by fintech companies increased to 67.2%, up from 66.1% in the same period last year.

Looking at individual credit card usage, most sectors expanded, centered on travel (+56.5%) and restaurants (+22.5%), but usage in fuel (-9.8%) and furniture & home appliances (-4.5%) sectors showed sluggish performance.

By region, credit card usage increased in all areas during the first half of this year. The highest year-on-year growth rate was in Daejeon·Chungnam (12%), followed by Daegu·Gyeongbuk (9.7%) and the Seoul metropolitan area (9.5%).

The amount of account transfers through small-amount payment networks (daily average of 92 trillion KRW) decreased by 0.6% compared to the same period last year.

The amount of promissory note and check payments averaged 15 trillion KRW daily, decreasing by 13.5% compared to last year due to the expanded use of 50,000 KRW bills and reduced issuance of electronic promissory notes. The amount of cashier's check payments, which had increased by 17.5% in the second half of last year, decreased by 2.6% in the first half of this year. The decrease in electronic promissory notes was mainly due to a reduction in the issuance of electronic promissory notes by securities companies to borrow subscription deposits for public offerings deposited with Korea Securities Finance, reflecting a decline in domestic corporate IPO public offering amounts.

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