SEOUL, Jan. 29 (Korea Bizwire) - Debit card use in South Korea continued to rise in 2015 on tax benefits, data showed Friday, in a sign that the direct payment system is taking root in the country.
According to the data by the Credit Finance Association of Korea (CREFIA), purchases made with debit cards reached 131.5 trillion won (US$108.9 billion) last year, or 20.6 percent of the 636.81 trillion won worth of transactions made using various types of cards.
Last year marked the first time that the total topped the 20 percent mark, up from 19.6 percent in 2014.
“The use of debit cards has been rising steadily over the years,” the association said. “The maximum 50 percent income deduction rate benefits given by the government for purchases made with debit cards seems to be fueling growth.”
Higher deductions translate into more government refunds when people file for year-end tax settlements.
Despite steady growth in its use, on-year growth of debit card use, stood at 15.8 percent last year, a deceleration from the 20.8 percent surge reached in 2014.
Despite some slowdowns in recent years, overall card-based purchases posted a double-digit gain last year. The last time purchases made using credit, debit and other forms of pre-paid cards grew by double digits was in 2012, when it was 13.5 percent.
Of all card settlements made last year, credit card use reached 503.64 trillion won.
The association said the rise in transactions reflects the lifting of past ceilings on taxes people can pay with their card, and more no-interest payment schemes offered to consumers by card companies.
Efforts made by the government to get people to spend more to prop up the economy, in the face of weak exports, played a part in higher transaction numbers, it added.