Kkwongmeokgo Almeokneun 'Jiyeokhwaepye'... Pohang Sarang Gift Certificate, 3-Year Big Data Analysis of Production and Added Value 1 Trillion Won

Users Get Discounts, Merchants Bear Low Commission Fees

Pohang City Hall.

[Asia Economy Yeongnam Reporting Headquarters Reporter Kim Yong-woo] An interesting analysis has emerged on ‘local currency,’ which users appreciate for discounts and merchants welcome due to lower fees compared to credit cards.

Pohang City conducted a big data analysis of its local currency, the ‘Pohang Love Gift Certificate,’ over the past three years.

According to Pohang City, it was analyzed that the local economy benefited positively with a production inducement effect of 761.9 billion KRW and a value-added inducement effect of 304.5 billion KRW.

To establish a tailored strategy for revitalizing local currency through scientific and multifaceted analysis of consumer usage status and consumption patterns, Pohang City tracked big data of the Pohang Love Gift Certificate over the past three years (2019?2021).

The Pohang Love Gift Certificate is a local economic revitalization policy prioritized by Pohang City to increase sales for small business owners and build a virtuous cycle ecosystem in the local economy. In January 2017, the city signed a sales agency agreement with local financial institutions and first issued 130 billion KRW in paper form purely funded by city finances. The total cumulative issuance amount reached 1.62 trillion KRW as of this year.

The big data analysis showed a cumulative payment amount of 1.0348 trillion KRW during the period. Among this, the card-type, launched in September 2020 with a short circulation period, accounted for about 95 billion KRW (9.2%), while the paper-type payment amount was ten times higher at 949.8 billion KRW (90.8%).

To analyze the economic effects of this local currency, an input-output (IO) analysis was conducted based on the regional industry input-output table provided by the Pohang branch of the Bank of Korea.

The final demand for local currency in 29 regions of Pohang was mainly used in wholesale and retail trade and commodity brokerage services, as well as in groceries, restaurants and accommodation services, and medical and health sectors.

Based on the usage scale (paper + card types), the production inducement effect for the 29 regions analyzed totaled 769.1 billion KRW. The value-added inducement effect from the gift certificates was analyzed to generate a total of 304.5 billion KRW.

It was confirmed that regions with a large production inducement effect also showed a large value-added inducement effect.

The cumulative payment amount of Pohang City’s local currency is 20 times higher than other local governments in Gyeongbuk Province, and the main age group shows a higher consumption ratio among young people (in their 20s and 30s) compared to other local governments, indicating a high level of activation.

Also, centered on Jukdo Market’s wholesale and retail, the paper-type gift certificates grew to the nation’s largest scale through securing large franchise stores and smooth distribution. Reflecting citizens’ demands, the ‘Pohang Love Card’ was introduced to enhance purchase options and convenience, alongside the distribution of national subsidies.

Furthermore, through various policy allowance supports, the local currency naturally permeated daily life and settled into citizens’ wallets, showing visible achievements.

This year’s Pohang City local currency activation policies include building an integrated platform for paper and electronic types, raising the individual monthly limit from 700,000 KRW to 1 million KRW, and operating a mobile visiting bank. Other measures include expanding purchase opportunities in underserved farming and fishing villages, operating a Pohang Love Card call service, running unmanned self-service counters, introducing Samsung Pay easy payment service, and adding transportation card functions.

Pohang City plans to issue 320 billion KRW worth of gift certificates this year. As of March, 90 billion KRW has been sold, and the Pohang Love Card allows individual recharging up to 500,000 KRW per month (up to 4 million KRW annually) within a monthly fund limit of 12 billion KRW.

Mayor Lee Kang-deok of Pohang said, “The big data analysis proved the success factors and effectiveness of the Pohang Love Gift Certificate and achieved results in securing data evidence for further activation in the future.”

The mayor added, “Through scientific and meticulous policy establishment based on data, we will make this an opportunity to further enhance the usage value of local currency.”