Last Year Card Approval Amount Growth Rate 3.4%... Lowest Since Records Due to COVID-19

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[Asia Economy Reporter Ki Ha-young] Last year, the growth rate of card approval amounts recorded the lowest level since statistics began in 2005. This was the result of reduced consumption due to strengthened social distancing measures amid the COVID-19 pandemic.

According to the '2020 Q4 Card Approval Performance Analysis' released by the Korea Credit Finance Association on the 28th, the total card approval amount last year reached 885.7 trillion KRW, an increase of 3.4% compared to the previous year. The number of approvals was 21.73 billion, a decrease of 0.1% from the previous year.

The annual growth rate of 3.4% in approval amounts is the lowest since the Korea Credit Finance Association began compiling domestic card approval statistics in 2005. Compared to nearly 6% growth rates in the past three years?6.3% in 2017, 6.6% in 2018, and 5.7% in 2019?it dropped by almost half. It is also 1.3 percentage points lower than the previous lowest rate of 4.7% in 2013.

In December last year, when the third wave of COVID-19 led to the implementation of social distancing level 2.5, both total card approval amounts and the number of approvals decreased. This was the first decline in approval amounts in eight months since April last year. The total card approval amount in December was 74.9 trillion KRW, down 3.8% year-on-year. The number of approvals also decreased by 8.8% year-on-year to 1.72 billion. After the first COVID-19 wave began in March last year, card approval amounts decreased by 4.3% year-on-year for the first time, continued to decline by 5.6% in April, and then turned to an increasing trend from May onward.

By industry, the total card approval performance in the transportation sector last year decreased by 55.1% compared to the previous year, due to reduced use of airlines, railroads, and other transportation caused by restrictions on movement and travel. The card approval performance in business facility management and business support services also dropped by 41.5% due to poor sales in travel-related services.

The accommodation and food service industry also decreased by 12.2% year-on-year. The education service sector’s card performance declined by 11.3% year-on-year due to academy closures and delayed school openings at all levels. The arts, sports, and leisure-related service sector also fell by 10.6% year-on-year due to reduced use of multi-use facilities such as museums, botanical gardens, theme parks, and karaoke rooms.

The Korea Credit Finance Association analyzed, "Although the overall approval amount maintained an increasing trend due to increased purchases through non-face-to-face and online channels, consumption contraction intensified mainly in offline-centered industries due to the third wave of COVID-19 and strengthened social distancing measures."

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