South Korea’s payment cards market is well developed and has been on a sustained growth for the past few years. High banked population, developed payment infrastructure and high financial awareness, has resulted in high card penetration and usage. Hence, the card payments market is set to rebound and with 5.3% growth in 2021, says GlobalData, a leading data and analytics company.

According to GlobalData’s Payment Cards Analytics, the value of card payments in South Korea is forecast to register compound annual growth rate (CAGR) of 4.9% between 2020 and 2024 to reach KRW1,127.8 trillion (US$1.0 trillion) in 2024.

Sowmya Kulkarni, Senior Banking and Payments Analyst at GlobalData, comments: “South Korea’s cards market is highly developed with every individual holding five cards. Koreans have a high usage of payment cards with average frequency of credit card usage at 136.2 times in 2020 – much higher than even developed markets like France, Canada, the US and the UK.”

Credit card is the preferred payment card in the country due to pricing benefits it offers. However, debit cards usage is gradually increasing, from 20.2% in 2016 to 21.4% in 2021. Growth in debit card usage has been supported by government tax benefits. Debit card holders have got tax deduction of 30% on their debit card expenditure – double the equivalent for credit cards. This has been further increased to 60% in June 2020 as a relief measure due to COVID-19.

South Korea has been on the forefront of innovation – whether its contactless payment and biometric or digital-only banks offering faster and convenient payment services. These digital-only banks are now competing with traditional banks and increasing their market share. Kakao Bank, a digital-only bank launched in July 2017, has over 16 million customers, which is slightly lower than traditional players like Hana Financial Group, which has 21 million customers.

Sowmya concludes: “The COVID-19 outbreak hampered the growth of card payments in South Korea. It is expected to rebound in 2021 and grow strongly over the next four years, supported by its well-developed payment infrastructure, high card acceptance rate among merchants and rising preference for digital services.”