'Card Cashback' Applied from October... How Broad is the 'Usage' Scope?

Government to Announce Card Cashback Operation Plan After Chuseok

[Image source=Yonhap News]

[Asia Economy Reporter Ki Ha-young] Starting next month, a card cashback system called the 'Win-Win Consumption Support Fund' is scheduled to be implemented, sparking growing interest in where it can be used. Since the government has stated it will recognize as many usage locations as possible, it is expected that non-face-to-face consumption such as delivery applications (apps) will also be included.

According to the Ministry of Economy and Finance and other government agencies on the 22nd, a detailed plan for operating the card cashback system will be announced after the Chuseok holiday.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated at the 45th Emergency Economic Central Countermeasures Headquarters meeting on the 16th, "We are preparing an implementation plan so that the Win-Win Consumption Support Fund can be paid starting from consumption in October," adding, "Considering public convenience and quarantine measures, we will support non-face-to-face consumption and recognize as many usage locations as possible."

The Win-Win Consumption Support Fund is a system that refunds cashback on increased credit and debit card usage for citizens aged 19 and older. It returns 10% of the amount exceeding a 3% increase compared to the average monthly card usage in the second quarter of this year (April to June) as card points that can be used like cash. The monthly limit is 100,000 KRW per person. A budget of 700 billion KRW has been allocated for this purpose.

For example, if a person who spent an average of 1,000,000 KRW per month on cards from April to June uses 1,530,000 KRW next month, the cashback will be calculated as 10% of the increase after excluding 3% of the base amount. That is, 10% of 500,000 KRW (1,530,000 KRW minus 3% of 1,000,000 KRW, which is 30,000 KRW) equals 50,000 KRW cashback.

The places where the cashback can be used are expected to be broader than the 'Win-Win National Support Fund,' which was paid to 88% of the entire population. This is because the goal is to revive domestic consumption. To encourage spending in local small businesses, most stores except department stores, large discount stores, duty-free shops, and luxury brands will be eligible. In particular, the government is reportedly considering allowing delivery apps such as Baedal Minjok, Coupang Eats, Yogiyo, as well as corporate supermarkets (SSMs) like Homeplus Express and No Brand.

The system for distributing the Win-Win Consumption Support Fund is also nearing completion. Currently, the government is working with the Korea Credit Finance Association and card companies to build the payment system. The system will operate by having individuals designate their most frequently used main card, after which the card company will collect usage data, calculate the baseline amount, and notify the individual accordingly.