South Korea's Coinless Experiment
Starting 20th April 2017, South Korea will be experimenting with a nationwide 'coinless trial'. Customers will have the option of depositing their small change into prepaid cards directly. Prepaid cards include transportation cards, bank cards or mobile payment accounts.
The project allows 'consumers to deposit their change from purchases into prepaid or mobile cards' at supporting stores such as CU (a major South Korean convenience store chain), Seven Eleven, E-Mart and more. The trial is being led by the Bank of Korea (BOK). They state that their primary goal is to spend less on coin production. The secondary goal of the 'pilot project for a coinless society' is the convenience, BOK told Korea Times.
According to Reuters, South Korea 'wants to go coinless by 2020' but this may be impossible because, for instance, 'many short-term foreign visitors may not bother to sign up for alternative payment methods.' CGTN reports that, 'some store-owners worry that scrapping coins may hurt the elderly, many of whom are still low tech and coin friendly'.
In 2016, the bank reportedly spent the equivalent of 53.7 billion won or 47 million US dollars minting coins. They also estimate that '20% of transactions [within the country] are being settled with cash'. The smallest coin (the ₩10 won) is valued at around half a British penny while the largest coin (the ₩500) is valued at around 35p.
Such small values makes the people perceive losing the change as 'inconsequential'. This view is supported by a survey conducted by BOK, where two-thirds of those surveyed claimed that they no longer carry coins and half would support a cashless society.
“We plan to discuss the matter with the banking industry in the second half of next year”
Yon-hap quoted Cha Hyeon-jin (an official handling the issue at BOK) who said that 'no decision has been made yet on whether the pilot project could eventually lead to a cashless society, but he predicted that there is a good chance that such a development may be possible down the road'.
Yon-hap then corrected the quote to finish with 'but chances of the country becoming a completely cashless society are low.' This amendment suggests that the bank wants to hold off on admitting any cashless ambitions until they see the results of the coin-less trial.
'South Korea is reportedly among the least cash-dependent countries in the world' with 20% of Korea payments conducted with cash, the Bank of Korea told The Independent. Even though Sweden is known for leading the race with a 40% drop in cash usage since 2009; India is noted for their merciless note ban end of last year; now South Korea's approach leaves us itching to see the outcome.