"Luxury Consumption Excluded"...Inevitable Controversy Over Cashback Luxury Criteria

From October, 100,000 KRW Monthly Card Cashback Per Person
Detailed Criteria to Be Announced Tomorrow

[Asia Economy Reporter Jang Sehee] Starting next month, the Win-Win Consumption Support Fund (card cashback) policy, which refunds up to 100,000 KRW per person per month, will be implemented, and controversy over the exclusion of luxury goods consumption is expected to continue.

According to the Ministry of Economy and Finance on the 26th, the government will announce detailed implementation plans for the card cashback policy, including payment criteria and usage locations, on the 27th. Since the government has previously announced that card usage at department stores, large supermarkets, and luxury specialty stores will be excluded, such consumption will not be included. The goal is to ensure that the consumption effect benefits small business owners and local markets.

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However, since the definition of luxury goods is not clear and prices vary by item, controversy is expected to continue. The definition of luxury goods is "products of globally very famous and very expensive brands," with no clear price standard.

If set at 5 million KRW or 30 million KRW or more, items priced below that may be counted as eligible purchases. In addition to department stores and outlets, consumption at stores such as Cheongdam road shops must also be excluded.

Moreover, since cashback consumption itself leads to sales for the respective brands, if some brands are excluded, fairness issues may arise.

The card cashback policy refunds 10% of the amount spent exceeding 3% more than the average monthly usage in the second quarter (April to June), up to 100,000 KRW per month, when using credit or debit cards.

The payment process is conducted through a designated dedicated card company for each individual. Once a dedicated card company is assigned per individual, it verifies the total monthly usage of all credit and debit cards held by the individual and pays the cashback through the dedicated card company in the following month. The cashback paid to each individual is designed to be deducted first when using the card.

Meanwhile, delivery apps are expected to be included as eligible usage locations. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, previously stated, "When creating the credit card cashback, the main purpose was to encourage consumption at local markets, self-employed businesses, and small business owners' restaurants rather than at department stores, specialty stores, or luxury goods stores," adding, "In the case of delivery apps, we can consider including them."