Credit card spending shows coronavirus impact

Depressed consumer demand and sentiment as the coronavirus pandemic’s shocks continue to reverberate through the economy appeared to take a toll on debit and credit card spending in Korea last month, which decreased for the first time in more than two years.

March spending fell 4.3 percent on-year, according to data released Tuesday by the Credit Finance Association. But the first quarter of 2020 posted a modest on-year increase of 2.5 percent to 205.8 trillion won ($252 billion), helped by increased card spending in the first two months of the year.

Approvals for new debit and credit cards also increased 2.2 percent in the first quarter, compared with the first quarter of 2019. There were 5.04 total transactions.

In January, overall card spending grew 5.8 percent on-year, while spending in February was up 6.5 percent.

March marked the first on-year decline since October 2017, when spending dipped 0.8 percent. It was the sharpest drop since the association began compiling monthly card spending data in 2005.

Credit cards alone amounted to 160.7 trillion won in spending, up 2.9 percent. In the last two years, credit card spending has grown between 5 and 7 percent each quarter.

The association pointed to depressed consumer confidence, social distancing and a significant decline in tourists as reasons behind the reduction in spending.

Predictably, the tourism and transportation industries were hit the hardest.

In the first quarter the tourism industry and related businesses saw overall card spending shrink 36.7 percent. Credit card spending related to the transportation industry plummeted by 39.9 percent.

Spending in education services dropped 15.2 percent, as schools, private institutions and hagwons were forced to close.

Spending in the leisure, arts and sports industries, which includes amusement parks, museums and botanical gardens, shrank by 6.6 percent.

Individual services, such as haircuts, public baths and wedding services, declined 6.5 percent.

However, retail spending jumped 5.5 percent. While charges to credit cards at offline venues have dropped, online shopping reported a significant surge.

Online shopping transactions, according to Statistics Korea, were up 25.1 percent in February to nearly 12 trillion won.
Food delivery revenue in February nearly doubled from 617.9 billion won from a year ago to 1.12 trillion won.

BY HONG JI-YU [lee.hojeong@joongang.co.kr]