Cash payment rate falls below 20% for 1st time

Cash transport personnel work to distribute cash to commercial banks at the Bank of Korea’s headquarters in Seoul, Jan. 14. Joint Press Corps

The use of cash has been sharply declining as more consumers turn to noncash payment options such as credit cards and mobile wallets, according to the Bank of Korea (BOK) on Thursday.

The BOK nationwide survey of 3,500 adults aged 19 and older found that cash accounted for just 15.9 percent of all payments last year, ranking behind credit cards at 46.2 percent and debit cards at 16.4 percent.

Cash usage has been steadily declining. It stood at 41.3 percent in 2013 and dropped to 36.1 percent in 2017. It continued to fall, dropping to 26.4 percent in 2019 and 21.6 percent in 2021.

By age group, respondents in their 20s tended to prefer debit cards, while credit cards were more commonly used among those in their 30s to 50s.

Individuals aged 60 and older appeared to rely more on cash, likely due to limited access to credit cards after retirement and lower familiarity with digital payment methods.

With the decline in cash usage, more stores, such as unmanned kiosks, are no longer accepting cash. Buses that do not accept cash fares are also on the rise.

The rapid growth of stablecoins, which are pegged to fiat currencies, is even raising the possibility that demand for physical cash could diminish.

This view is further supported by the BOK’s active push to test central bank digital currencies (CBDC) and build the infrastructure for a future digital monetary system.

The BOK, however, continues to stress that it has no intention of halting the issuance of physical currency.

During a briefing last month, BOK Deputy Gov. Lee Jong-ryeol emphasized that physical cash will always remain necessary, pointing out that digital currencies may become inoperable during power outages or communication failures. He also noted the importance of cash for those less comfortable with digital technology.

“The trust in digital payment methods stems from the assurance that these funds can be converted into central bank-issued physical currency at any time,” he said. “Maintaining trust in the currency system is vital.”

He stressed that the central bank is considering how to better circulate and facilitate the use of physical cash.