By Sunny Um WIRED Korea

Jeong Hye-yoon does not remember when was the last time she carried coins in her purse. For a 26-year-old undertaking a master’s degree course, using coins for payment is a thing of the past.

When Jeong is asked if she would like to receive change in coins, she shakes her head. “I don’t even have a purse to keep coins in,” she says. When she has no other choice than to receive coins, she puts them in her pocket and later throws them into a coin bank, from which she rarely takes any of them out.

Jeong is not atypical. Many Korean consumers find carrying coins with them cumbersome. Nearly half of the 2,500 respondents to a 2016 Bank of Korea survey said they wouldn’t like to use coins.

More than 60 percent of the respondents said coins are “inconvenient to carry.” Jeong Na-young, a 24-year-old office worker, feels the same. She keeps all coins she has received at home and deposits them into her bank account once in a while, instead of using them as a means of payment.

“I keep coins at home until they pile up to a certain amount and then I deposit them in my bank account,” Jeong says. “When I need cash, I withdraw banknotes from a nearby ATM.”

For some others, there are more convenient alternatives – plastic cards, touch-and-go smart cards, and mobile payment apps. Lee Jee-eun, a Gangnam resident, says she has rarely been carrying coins or banknotes for several years now. “You have credit cards and mobile apps that provide payment services. There’s no reason to use cash anymore,” Lee says.

Coinless Society

With the trend in mind, the central bank launched what is called a “Coinless Society” project in 2017. The project aims to induce consumers to put change from cash payments made at supermarkets and convenience stores into electronic payment devices, such as prepaid cards and digital wallets. As of today, more than 35,000 shops nationwide are participating in this project.

The process is simple. A customer, for instance, buys a 1,200 won drink and gives 2,000 won in banknotes to the cashier. Instead of receiving eight 100 won coins, he may choose to top up the same amount in his prepaid card or digital wallet.

Any sum of money may be transferred from a digital wallet to a bank account that is linked to a user's wallet. But customers need to spend extra time to identify themselves on digital wallets when they make a cash withdrawal. That's why some customers may wish to send change directly to their bank accounts on the spot instead of using digital wallets.

The bank’s idea for a new service is to simplify this cumbersome process and make it possible to send change directly to the bank accounts to which customers’ credit or debit cards are linked, instead of sending it via digital wallets.

When the new service is ready at a store, all that the cashier will need to do is to take cash from a customer, use a device to confirm the customer’s bank account from his card and send the change to his bank account. The technology that is needed for the envisioned service is now under development, says the central bank, which plans to launch the service in the first half of this year.

The bank says the new service, when it is added to the Coinless Society project, will save customers much more from the hassle of carrying coins around. “Cash payment will be made easier, as customers would be able to store their coins in their bank accounts as well as their other electronic means of payment,” a bank official says.

But why would a customer use the service for cash payment that requires him to present his card to the cashier when he can make the transaction process much simpler by using his card? The bank has no ready answer. Is it blinded by the prospect of reducing the cost of minting coins with the launch of the new service?

Undoubtedly, the new service will help reduce the amount of money used to mint coins. During the 2015-19 period, the central bank spent an annual average of 40 billion won on coin minting. “The cost of issuing and circulating coins will drop when this project proceeds,” says the official.

Do We Need It?

Although the top-up service was launched three years ago, it is not available at many shops yet. A cashier who has been working for several months at an Emart 24 store in Sangam-dong, Seoul, with Emart 24 being a brand participating in the Coinless Society project, says he doesn’t know how the top-up system works.

When WIRED Korea asked him to transfer change to a digital wallet, the clerk made phone calls to the shop owner and the management team of the brand to ask them what he needed to do for the transfer. “No customer has asked me to top up change in his digital wallet yet,” said the clerk.

Fewer people use the service now than three years ago. In the third quarter of 2017, the service was used about 35,000 times, but the number dropped by 25.9 percent in the second quarter of 2019, according to a report from Kim Chung-woo, a representative of the Democratic Party.

One reason is that cash is no longer a primary means of payment. The service targets consumers using cash for the purchase of a service or product, but only one out of five transactions was made with cash payment in 2017 in Korea, according to a report from the central bank.

A wide range of payment options is available, and some of them are very convenient.

Lee from Gangnam finds the digital wallet service Kakao Pay more convenient than other services. All she needs to do is to scan a QR code next to the counter with her phone to make the payment and earn membership points. “I pay with cash on only a few days per year,” Lee says.

Then would she need a new service from the central bank that directly sends change to her bank account after a cumbersome process of confirming her bank account on her credit card?