"COVID-19 Causes Card Usage Gap by Category... Online Shopping '↑', Accommodation & Food Services ↓"

[Asia Economy Reporter Yoo Hyun-seok] Although card spending in face-to-face service sectors such as accommodation and food services decreased last year due to COVID-19, consumption in online shopping increased.

According to the '2021 Consumption Status and Implications by Item Analyzed Using Personal Credit Card Data' released by the Korea Employers Federation on the 29th, the total personal credit card spending last year was 605 trillion won, a 10% increase compared to the previous year. Credit card spending has been on the rise every year.

It recorded 539 trillion won in 2019 and 550 trillion won in 2020. A representative from the Federation explained, "Credit card spending showed an annual increase of 7-10%, but in 2020, due to the impact of COVID-19 and other factors, it fell significantly short of the usual growth trend, while in 2021, it showed a 10% increase again."

Last year, the gap in changes in card spending by item was clear. Among the five major items with high personal credit card spending (e-commerce/telecommunication sales, general retail, utilities/personal professional services, accommodation/food, medical/health), credit card spending on e-commerce/telecommunication sales recorded 141 trillion won, a 21.1% increase compared to 2020. In contrast, accommodation and food decreased by 1.5% to 53 trillion won during the same period.

In particular, there were seven items where personal credit card spending decreased in 2020 compared to 2019. However, last year, only three items showed a decrease compared to the previous year. Especially, sectors such as travel/transportation, clothing/accessories, education, and entertainment/culture, which saw a decline in personal credit card spending in 2020, experienced an increase in card consumption last year.

Looking at personal credit card spending by item, among a total of 15 items, five items?travel/transportation, accommodation/food, clothing/accessories, education, and entertainment/culture?had not yet recovered to 2019 levels in 2021. On the other hand, ten items recorded higher spending compared to 2019, including e-commerce/telecommunication sales, utilities/personal professional services, finance/insurance, groceries, and automobiles.

Ha Sang-woo, head of the Economic Research Department at the Korea Employers Federation, said, "It is fortunate that consumption has improved to some extent as the shock of COVID-19 gradually subsides, but it is concerning that consumption in face-to-face service sectors, such as accommodation and food services where many self-employed people are concentrated, remains sluggish. Especially, industries providing offline-based services like travel and accommodation are practically unable to shift to online sales, so the economic damage caused by COVID-19 is presumed to have been greater."

He added, "Policy support for sectors where self-employed people have suffered significant damage is urgently needed, and considering that labor costs have a major impact on management conditions in these sectors, stabilizing the minimum wage is absolutely necessary."

Meanwhile, card spending at restaurants also showed differences depending on whether social distancing measures were tightened. When examining the average daily personal credit card spending by month, card spending at restaurants significantly decreased during periods when COVID-19 spread widely and social distancing measures were strengthened. Conversely, personal credit card spending through e-commerce steadily increased without being greatly affected by the spread of COVID-19 or the strengthening of quarantine measures, the Federation explained.