The South Korean card payments market is forecast to grow by 5.9% to US$974.3 billion in 2024, supported by high consumer preference for electronic payments.

According to data and analytics company GlobalData’s payment cards analytics, card payment value in South Korea registered a growth of 12.7% in 2022, driven by a rise in consumer spending.

However, the market was tempered in 2023, registering a slower growth of 6.4% to reach US$919.9 billion, amid a slowdown in the domestic economy.

“South Korea’s card payment market is well-developed, with the country’s consumers being prolific users of payment cards,” says Ravi Sharma, lead banking and payments analyst at GlobalData.

On average, each individual holds 5.9 cards as of July 2024, while the frequency of card use for payments increased from 81.3 times per card in 2020 to 98.9 times per card in 2024.

With a well-developed point-of-sale (POS) infrastructure in place, consumers in South Korea are gradually becoming more aware of the benefits of payment cards. The number of POS terminals per million inhabitants in the North Asian country stands at 65,355 in 2024, which is among the highest in Asia-Pacific.

Credit cards dominate the payment card market, accounting for 79.9% of card payment transaction value in 2024, while debit cards accounted for just 20.1%. This is due to flexible repayment options and value-added benefits such as cashback, discounts, and reward programmes on credit cards that banks offer. 

E-commerce rise

In addition, the government offers tax benefits on credit card spending. Credit card holders receive tax benefits if they spend the equivalent of 25% of their annual salary on credit cards. 

“A strong banked population, high financial awareness, and banks incentivizing customers through a range of benefits, backed by government support to boost cashless payment methods, have driven payment card adoption in the country,” Sharma adds.

The rise of e-commerce also contributed to the growth of the payment cards market, as credit cards are the most preferred payment tool for online purchases.

However, while South Korea’s card payments market has been on a growth trajectory, it continues to face challenges such as uncertain economic conditions and rising inflation, which are impacting card spend.

“Overall, the country’s card payments value is expected to register a slow compound annual growth rate (CAGR) of 5.4% between 2024 and 2028,” says Sharma.