Credit card payments fall for first time in 16 yearsCredit card payments fell for the first time in 16 years as people reduced spending due to the coronavirus pandemic.
According to a report by the Bank of Korea Tuesday, credit card spending fell by 0.3 percent in 2020 to 1.96 trillion won ($1.7 billion).
It is the first time since 2004 the number fell.
Growth of spending on all types of cards -- credit, debit and prepaid cards -- slowed down significantly last year.
Spending on cards reached a daily average of 2.5 trillion won in 2020, up 0.6 percent from the previous year.
On-year card spending growth has remained above 5 percent in recent years.
In 2019, card spending grew by 5.8 percent, while in 2018 it grew by 6.2 percent.
Social distancing measures intended to contain the virus have kept people away from visiting offline stores. People also reduced overall consumption amid crisis.
While credit card spending fell, spending through pre-paid cards skyrocketed by 590.8 percent last year as the government's emergency relief funds were distributed to households through these cards.
By monthly figures, overall card spending fell significantly in March and April last year, during the first wave of the Covid-19 pandemic. Card spending slumped by 7.4 percent on-year in March and 4.4 percent in April.
On-year spending growth slowly recovered from May, but then plunged in December again as the country faced third wave of the virus, the central bank said in report.
By payment methods, contact-free card payments, such as payments using mobile apps, increased by 16.9 percent to 849 billion won, while face-to-face payments declined by 5.6 percent to 1.4 trillion won.
Contact-free card payments include using credit cards for online shopping and paying taxi fees via mobile application linked with credit cards rather than paying by physical plastics.
An increasing number of people have been moving to contact-free payments from before the spread of Covid-19, boosted by rapid digitalization in the finance sector.
In the first quarter of 2019, 32.2 percent of all card transactions were contact-free, according to the bank's report. The figure increased to 36.4 percent in the first quarter of 2020 then to 39.6 percent in the fourth quarter of that year.
BY KIM JEE-HEE [firstname.lastname@example.org]