[Chaos in Cryptocurrency] Tried Paying with Paycoin at Convenience Store... Easy to Use but Complicated to Buy

[Asia Economy Reporter Lim Chun-han] Amid the ongoing cryptocurrency craze, the domestic cryptocurrency 'Paycoin' has been providing payment services at over 32,000 convenience stores nationwide for a month. After actually purchasing and using Paycoin for payment, it proved to be fast and convenient enough to be considered a new payment method. However, unresolved issues remain, such as tax problems?unlike credit cards or cash, income tax deductions are not applied, and users may suffer losses if Paycoin's market price plummets.

◆ Convenient and Fast = On the afternoon of the 7th, after purchasing a lunchbox and beverages at an Emart24 store in Gwanak-gu, Seoul, I attempted to pay with Paycoin. I told the clerk, "I will pay with Paycoin," and showed the payment barcode on the application (app). The convenience store employee appeared confused and asked, "Huh? What is Paycoin?" I naturally expected the payment to go through smoothly, but since Paycoin is a cryptocurrency and I heard it could be used at Emart24, the clerk replied, "I think I need to scan the barcode." Contrary to the uneasy process, the payment was completed with a 'beep' sound. The Emart24 employee said, "This is my first time processing a Paycoin payment." After visiting several convenience stores, some employees said it was their first time, while others responded, "There are actually people using it."

Although still small in scale, small transactions at convenience stores are rapidly increasing. CU and 7-Eleven, which adopted Paycoin early on, reported a recent surge in users. CU announced that Paycoin payment amounts in March increased by 570% compared to the same period last year, and 7-Eleven said Paycoin usage from January to April this year rose by 654%. Ministop also saw a 561.7% increase in transaction volume in the first quarter compared to the previous quarter. Currently, Paycoin has about 70,000 payment affiliates, including convenience stores, BBQ, Domino's Pizza, Kyobo Bookstore, and CGV. Paycoin's payment fee is less than 1%, which is lower than credit card fees. Therefore, retail businesses with frequent small transactions are actively adopting Paycoin.

Transaction history made with Paycoin at the convenience store Emart24.

◆ Volatility and Taxation Standards Are Key = There are still many issues to resolve before Paycoin can be widely used in the retail industry. Unlike easy payments, purchasing Paycoin is not simple. Users must buy it through cryptocurrency exchanges and then transfer it back to the app, which takes time and incurs transfer fees set by the exchanges. For small transfers, the fees are expensive, making the cost disproportionate, and buying a large amount at once carries the risk of price volatility. In fact, Paycoin's price dropped by 6.43% just three days after purchase, reducing the principal amount.

Unclear taxation standards are also problematic. According to the virtual asset taxation plan to be implemented next year, a 20% capital gains tax will be imposed on income generated from virtual asset price gains. While value-added tax (VAT) is paid when purchasing goods with Paycoin, income tax deductions are not possible because it is neither a credit card nor a cash transaction. The Income Tax Division of the Ministry of Strategy and Finance stated in March that purchases of goods or services with virtual assets are not eligible for cash receipt issuance. Additionally, if Paycoin's price surges and capital gains occur from cryptocurrency, both VAT and capital gains tax must be paid, raising the issue of double taxation, which remains a challenging problem to solve.