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With more digital transactions than ever before, Korean officials believe the currencies are outdated and so they are making progress towards the "coin-free society" by 2020
Of Joshua McMorrow-Hernandez for Coinweek …….
South Korea has announced that it will go without cash by 2020, as the nation becomes increasingly dependent on the use of credit cards and smartphones.
It is an ambitious goal for a country with a population of over 50 million people, an increasingly elderly figure.
"The most important objectives are the resolution of the inconveniences that consumers and shops experience as they transport and store coins and reduce the cost of coinage" commented Kim Jung-hyeok, director of the electronic banking sector at Bank of Korea and guide figure behind the national initiative to go without money.
Another reason is to exterminate criminal activity that is based on money to sustain a "shadow economy".
The Bank of Korea is already reducing the volume of coins it produces. For example, in 2005 the nation won 137.8 billion won ($ 120.2 million dollars), while a decade later, in 2015, total coin production fell to 103.2 billion won.
Even today, Korea spends 50 billion won to produce coins.
According to the new initiative, Koreans who pay for their goods or services using money will receive their change in the form of credit cards, transport cards or other means of payment without coins. There would also be circumstances in which paper currency could be returned in change, as if a consumer were to use a 10,000 won bill for the goods that cost 8,500 won. The merchant would deposit 500 won on a card and return 1,000 won in cash. The customer can also decide to deposit the full amount of the change to an account.
In this system, money would not necessarily be extinguished, but its use would be discouraged.
"Consumers show different preferences for options to transfer the change of coins to their cards, but we will start with public transport cards first, and by the next year, the system should work after completing a model development and a pilot test. # 39; year, " He looked at Kim.
While the transition to a cashless society has some cultural implications, observers do not believe it will have a significant negative impact on the Korean economy. "While the collapse of cash requires a social consensus, the society without coins is more like a technical problem in which the success of the scheme depends on the realization of the infrastructure" said the professor of Hanyang University Kang Im-ho, a consultant to the Bank of Korea on the implementation of his plan. "It's a game of coordination between government, finance companies, retailers and consumers".
According to Kang, Koreans have an exceptionally high average of 1.9 credit cards – a statistic that favors the move of the nation to cashless transactions. However, even in a nation that seems ready to accept the lack of money, more than a third of consumer transactions in Korea use cash. In 2015, a considerable 36% of transactions were managed with cash, compared to 39.7% of transactions completed with credit cards.
"In some Asian nations, including Korea and China, people give large sums of money as gifts to weddings or funerals.This cultural context shows that Korea needs a different approach to a & # 39; economy without money ", related economist of the Myongji University Moon jong-jin.
"I do not think it's possible to establish a world without absolute cash here" He continued. "It will be better to offer options for the elderly as we did for smartphones, not everyone uses a smartphone, but it is their choice."
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