South Korea considers converting unused card points to local currency

President Lee Jae-myung has directed officials to explore converting unused credit card points into local currency, a move aimed at stimulating regional economies. The proposal, announced during a State Council meeting, seeks to enhance the effectiveness of local currencies, particularly in revitalizing traditional markets and small business districts.

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There must be additional measures to stimulate consumption. Efforts to increase the utility of local currencies, which are highly effective in revitalizing traditional markets and small business districts, are particularly necessary.

Credit card companies have responded positively to the idea, stating that the technical implementation of converting points into local currency would be straightforward. "It would simply be adding another option for customers to use their card points," a representative from a major card company told Hankyoreh. They emphasized that such a system would not pose significant technical hurdles and would integrate seamlessly with existing point redemption methods.

Card companies also indicated that the conversion would have minimal impact on their business operations. They highlighted that card point usage rates are already high, and various methods are employed to encourage redemption. Unused points are accounted for as liabilities and are often donated to foundations after their expiration, meaning companies do not generate profits from unredeemed points.

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Technically, setting up the computer system to convert to the desired local currency (in connection with the local currency business operator) is all that is needed, so there are no particular restrictions or difficulties in conversion.

The president's proposal comes amid concerns about the large volume of unused points, estimated to be in the tens of trillions of won across various loyalty programs, including credit cards, telecommunication memberships, and mileage programs. Card companies alone have approximately 2.9 trillion won in unredeemed points, with about 100 billion won expiring annually. This initiative seeks to channel these dormant funds into local economies, providing a much-needed boost.

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Currently, card point usage rates are very high. We are encouraging the use of card points in various ways.