[1mm Financial Talk] 'K-Pass' to Appear Next Year... What Will Happen to the 'Altteul Transportation Card'?

Greater Discounts and Less Hassle than Altteul Transportation Card
No Need for Reissuance... Continue Using Existing Altteul Transportation Card
Earlier Issuance Means More Benefits... Already 600,000 Shinhan Cards Issued

The budget-friendly transportation card, once hailed as an 'all-time best' public transit discount card, will be discontinued starting July next year. Instead, a new 'K-Pass' will be introduced, allowing users to enjoy discounts more conveniently. It is expected that combining this with credit card companies' own public transit benefits will maximize fare discounts.

On the 31st, the Ministry of Land, Infrastructure and Transport recently announced that from the second half of next year, it will launch the public transportation fare refund support program 'K-Pass' to regularly reduce the transportation cost burden for low-income and youth groups and promote public transit use. This system will replace the budget-friendly transportation card, which provided unprecedented public transit discount benefits.

The budget-friendly transportation card was a program where the government and local governments provided public transit subsidies to all citizens in the form of mileage. When using public transit, mileage up to 20% was granted proportionally to the distance traveled by walking or cycling (up to 800m). Although usage was low at the time of its official launch after a pilot project in 2019 due to limited target areas, it expanded to most regions nationwide and became the 'ultimate' transportation card. Since July, the monthly mileage accumulation frequency for the budget-friendly transportation card increased from 44 to a maximum of 60 times. The maximum monthly refundable amount increased from 48,000 KRW to 66,000 KRW (based on a single use amount of 3,000 KRW).

However, the budget-friendly transportation card required users to install and authenticate a separate application (app) to measure the distance traveled by bicycle or on foot. This led to criticism that usage rates among transportation-vulnerable groups and the elderly were low. It was also difficult to verify whether users actually walked or cycled. The K-Pass has significantly improved these aspects. Since refunds are based solely on the number of public transit uses, convenience has been enhanced. It is unrelated to the distance traveled and does not differentiate spending amounts like the budget-friendly transportation card.

The discount rate has increased. For the lowest-income group, which has the highest mileage accumulation rate of 53.3%, a monthly discount of 48,000 KRW and an annual discount of 576,000 KRW can be received based on a bus fare of 1,500 KRW. Compared to the budget-friendly transportation card under the same criteria (42,000 KRW monthly, 500,000 KRW annually), this represents about a 14% higher discount. If the single fare is at the maximum level of 3,000 KRW for the budget-friendly transportation card, the discount amount increases by 45% from 66,000 KRW to 96,000 KRW per month (based on an accumulation rate of 53.3% and 60 accumulations). Additionally, if the 10-15% public transit fare discount benefits provided independently by credit card companies are added, the amount saved is expected to increase significantly.

Although the budget-friendly transportation card will be abolished, users need not worry. The government has stated that users of the budget-friendly transportation card will be able to use the K-Pass without issuing a new card. In fact, it is advantageous to use the budget-friendly transportation card as soon as possible to receive discount benefits early.

The issuance of the budget-friendly transportation card has already been steadily increasing. As of the end of July, Shinhan Card reported a cumulative issuance of 600,000 cards (130,000 credit cards, 470,000 check cards). This doubled in about three months after surpassing 300,000 cards in early April. It is interpreted that users flocked ahead of the bus fare increases in major areas such as Seoul in August. A card company official said, "There are products that add discount benefits not only for public transit fares but also for coffee shops, telecommunications fees, convenience stores, etc., so the number of users seeking practical benefits in daily life is steadily increasing," adding, "If usage becomes more convenient with the K-Pass, its popularity is expected to grow even more."