The South Korean card payments market is forecast to grow by 5.9% in 2024 to reach KRW1,272.4trn ($974.3bn), supported by high consumer preference for electronic payments, according to GlobalData, publishers of RBI.
GlobalData’s Payment Cards Analytics reveals that card payment value in South Korea registered a growth of 12.7% in 2022, driven by a rise in consumer spending. However, the value registered a slow growth of 6.4% in 2023 to reach KRW 1,201.3trn ($919.9bn), due to a slowdown in the economy.
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Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “South Korea’s card payment market is well-developed, with the country’s consumers being prolific users of payment cards. On average, each individual holds 5.9 cards as of July 2024, while the frequency of card use for payments increased from 81.3 times per card in 2020 to 98.9 times per card in 2024. A strong banked population, high financial awareness, banks incentivising customers through a range of benefits, and government support to boost cashless payment methods have driven payment card adoption in the country.”
With a well-developed point-of-sale infrastructure in place, consumers are gradually becoming more aware of the benefits of payment cards
The POS terminals per million inhabitants in South Korea stand at 65,355 in 2024, which is among the highest in the Asia-Pacific region.
Credit cards dominate the payment card market, accounting for 79.9% of card payment transaction value in 2024, while debit cards accounted for just 20.1% of the total card payment value in 2024. This is due to flexible repayment options and value-added benefits such as cashback, discounts, and reward programs on credit cards offered by banks.
In addition, the government offers tax benefits on credit card spending. Credit card holders receive tax benefits if they spend the equivalent of 25% of their annual salary on credit cards.
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By GlobalDataThe rise in e-commerce payments also contributed to the growth of the payment cards market, as credit cards are the most preferred payment tool for online purchases. Credit cards alone accounted for almost half (48.5%) of the total e-commerce transaction value in South Korea in 2023, according to GlobalData’s 2023 Financial Services Consumer Survey*.
Sharma concludes: “While South Korea’s card payments market has been on a growth trajectory, it continues to face challenges such as uncertain economic conditions and rising inflation, thereby impacting card spend. Overall, the country’s card payments value is expected to register a slow compound annual growth rate (CAGR) of 5.4% between 2024 and 2028.”
