Emergency Disaster Relief Funds Can Be Used at Paris Baguette but Not at Starbucks

Government Subsidy Applications Open from the 11th, but Usage Confusion Persists
Metropolitan Cities/Provinces vs. City/County-Level Usage, Some Places Differ from Local Government Subsidy Standards

On the 4th, when the government began distributing emergency disaster relief funds in response to the COVID-19 outbreak, an official posted a notice about the relief funds at a community center in Jongno-gu, Seoul. Priority recipients include 2.8 million households deemed in urgent need of support, such as those receiving livelihood benefits, basic pensions, or disability pensions, and the funds are provided in cash. Citizens not eligible for cash payments can choose to receive the support through credit or debit cards, paper/mobile/card-type local gift certificates, or prepaid cards. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Jo In-kyung] On the 11th, applications for the Emergency Disaster Relief Fund began, and the funds can be used as early as the 13th. However, many people are still confused about 'where it is accepted and where it is not.' The disaster relief fund being distributed this time is provided by the central government, and since some local governments previously distributed similarly named support funds with different usage locations, it feels even more complicated.

◆ Franchise Directly-Managed Stores Are Not Eligible, but All Franchisee Stores Are= First, let's look at the principle. The disaster relief fund can be used at places within the metropolitan area (city/province) where credit or debit card terminals are installed, excluding department stores, large marts, online shopping malls, and entertainment establishments. It cannot be used for utility bill payments, lottery tickets, purchasing precious metals, karaoke rooms, golf courses, etc. It is possible to use it at local clinics, pharmacies, hair salons, and for tuition fees and fuel payments. It can also be used at franchise bakeries or convenience stores operated as franchisee stores, not directly-managed stores. When ordering food through delivery apps, it can be used if payment is made on-site.

If the above explanation is complicated, just remember this: the Emergency Disaster Relief Fund cannot be used at Starbucks, where all stores nationwide are 100% directly managed. This is because all stores belong to the same company regardless of location. However, in cases like Paris Baguette, where there are few directly-managed stores and most are franchisee stores, the fund can be used. Many stores post notices about the use of the disaster relief fund on their entrances, but if still confused, it is best to ask the staff before using.

Another important issue is to check whether the business has annual sales exceeding 1 billion KRW. Some local governments have prohibited the use of the disaster relief fund at businesses with annual sales over 1 billion KRW, including local marts and supermarkets. However, the central government decided not to apply the annual sales criterion to disaster relief funds used via credit or debit cards, so it is now possible to use the fund at large local restaurants or stores with sales over 1 billion KRW. However, for those who received the fund via prepaid cards or local love gift certificates, some local governments apply the 1 billion KRW criterion while others do not, so it is necessary to check in advance before making a purchase decision.

◆ Government Support Funds Are Used First, and Any Excess Is Paid by the User= For credit cards, the disaster relief fund is first deducted from the charged points, and any amount exceeding the fund is billed on the next month's card statement. For debit cards, the amount used in the applicable business sector is first deducted from the fund, and the remaining payment is withdrawn from the user's linked bank account. If the remaining points are less than the payment amount, the user pays the excess with their own card.

For example, if a household received 800,000 KRW in disaster relief funds and has already used 780,000 KRW, then spends an additional 30,000 KRW, 20,000 KRW will be deducted from the remaining fund, and 10,000 KRW will be paid by the user. Each card company plans to provide SMS notifications whenever the charged funds are used, and events offering discounts or additional points to customers who apply for and use the disaster relief fund are also being prepared.

However, since the purpose of the disaster relief fund is to revitalize the local economy, there are regional usage restrictions. For example, if a Seoul resident receives the disaster relief fund as a credit card charge, it can only be used within the Seoul area. When paying with the funded card, the amount is first deducted from the charged funds, and if used outside the region, the payment is made from the existing bank account.

◆ Paper Local Love Gift Certificates Can Be Used Even After August= For prepaid cards, the government plans to accept applications starting from the 18th, allowing recipients to receive the card on the same day as the application. Similarly, the principle is to use it within the metropolitan area where the user resides, and unlike credit or debit cards, payment is not possible at places outside the designated usage locations.

For local love gift certificates, the usage area is narrower and may be limited to district-level rather than metropolitan-level depending on the local government. While the central government can uniformly apply usage areas for credit and debit cards, the usage areas for prepaid cards and local love gift certificates are determined by local government ordinances, leading some local governments to restrict usage to within their regions. The government is currently negotiating with local governments to apply the emergency disaster relief fund usage areas as broadly as possible. The usage period for credit/debit cards, prepaid cards, and mobile or card-type local love gift certificates is until August 31, but paper local love gift certificates have the advantage of a 5-year actual usage period.

The Ministry of the Interior and Safety plans to further supplement and organize the usage guidelines for the government emergency disaster relief fund and provide another public notice by the 10th at the latest.