Daejeon City Suspends Ontong Daejeon Ongoing Cashback... "Mixed Feelings of Regret and Concern Over Phase-Out"

[Asia Economy (Daejeon) Reporter Jeong Il-woong] Daejeon City is discontinuing the ongoing cashback benefits of the local currency ‘Ontong Daejeon.’ In the region, there is a shared sense of regret and concern, as many believe that the end point of stopping the ongoing cashback benefits will ultimately lead to the abolition of Ontong Daejeon.

According to the city on the 2nd, starting this year, Ontong Daejeon cashback benefits will only be provided during specific periods such as holidays and festivals.

The city recently sent notifications via text messages and the Ontong Daejeon app announcing the ‘temporary’ suspension of the ongoing cashback benefits. Although the term ‘temporary’ was used nominally, no specific schedule was provided, leading to speculation that Ontong Daejeon will eventually be phased out.

Recently, the National Assembly reinstated the budget for local currencies, and Daejeon is expected to receive 23 billion KRW in national funds. However, the city only allocated 1 billion KRW for Ontong Daejeon app operation costs and 2 billion KRW for gift certificate project expenses, totaling 3 billion KRW, without separately budgeting for cashback. This contrasts with last year, when 4.5 billion KRW was allocated for operating costs and an additional 181.4 billion KRW was set aside for cashback payments.

The reduction of Ontong Daejeon benefits began as early as August last year. The monthly recharge limit was reduced from 500,000 KRW with a 10% cashback in July to a 300,000 KRW limit with a 5% cashback starting in August. Additionally, from August last year, cashback was only provided within a monthly budget cap of 7 billion KRW, and payments were suspended once the limit was reached.

At that time, the city explained that the continuation of the 2023 project would be decided based on an analysis of the effectiveness relative to budget input and consumption patterns by income level.

While Ontong Daejeon, as a local currency, has positive functions such as preventing consumption outside the region and revitalizing neighborhood businesses, the city’s position was that negative effects like consumption concentration among certain regions and industries and consumption imbalance by income level also appeared, necessitating a review of the project from the ground up.

In particular, Mayor Lee Jang-woo of Daejeon openly expressed concerns, stating, “There is a problem that cashback benefits are concentrated on middle-class citizens with sufficient spending power, while vulnerable groups receive relatively fewer benefits. We will review the project from the beginning, evaluate cost-effectiveness, and seek a strategy of ‘selection and concentration’ to provide benefits where they are truly needed.”

Reflecting this, the city is understood to be exploring plans to provide cashback benefits only during specific periods such as holidays and to limit regular cashback benefits to small business owners and low-income groups. The core idea is to restrict cashback benefits, which were previously available to everyone, to those who genuinely need support through selection and concentration.

In response to the city’s move, there is a widespread view in the region that the suspension of ongoing cashback benefits will eventually lead to the abolition of Ontong Daejeon.

Some voices express mixed feelings of regret and concern. Lee (49), who runs a restaurant in Dunsan-dong, Seo-gu, said, “Honestly, it’s hard to say that stopping the Ontong Daejeon cashback benefits will have an absolute impact on the local commercial district,” but added, “However, it is true that the neighborhood businesses, which were quiet due to the spread of COVID-19, had somewhat revived with the introduction of Ontong Daejeon. That leaves a definite sense of regret and a vague worry that any potential decline in consumption might affect me even slightly.”

The suspension of ongoing cashback is also disappointing news for Ontong Daejeon users. Housewife Jeong (47) said, “I’m very disappointed that I won’t be able to receive the cashback that was quite beneficial,” and expressed regret, saying, “Stopping the existing benefits (cashback) feels like it increases the burden of everyday expenses such as academy fees for children, grocery shopping, and fuel costs in this era of high inflation.”

Meanwhile, Ontong Daejeon was launched in May 2020. As of December the following year, the cumulative number of Ontong Daejeon subscribers was about 760,000, with approximately 900,000 cards issued. As of the end of June last year, there were about 630,000 active users, with an average monthly spending of 340,000 KRW per person.