South Korean regions suspend local currency cashback benefits amid budget shortfalls

Local currency cashback benefits are being suspended across various South Korean regions, including Incheon, Daejeon, and Jeju, due to rapidly depleting budgets. This has led to confusion and frustration among users who relied on these incentives.

In Incheon, the "Incheon Eum" card's cashback program was halted on July 16th due to insufficient funds. The issue was exacerbated by a decision in April to double the cashback rate from 10% to 20% and increase the monthly spending limit from 300,000 won to 500,000 won. This led to a surge in transactions, with usage more than doubling in May and June compared to the previous months. Despite a supplementary budget of 135.7 billion won, the total allocated budget of 258.1 billion won for the year proved inadequate to cover the increased payouts.

Jeju Island also suspended its "Tamnaneunjeon" card's 10% cashback benefit (up to 70,000 won per month) on July 13th. The allocated budget of 42.5 billion won was exhausted earlier than anticipated, partly due to an increased 20% cashback rate offered for February to boost usage during the Lunar New Year holiday. While the Jeju provincial government cited increased user convenience and a surge in demand, some critics suggested the temporary boost was a pre-election tactic.

Daejeon has also halted cashback payments for its local currency, the "Daejeon Sarang Gift Certificate." The city had allocated 42.1 billion won last year for cashback benefits ranging from 7% to 13% on a monthly purchase limit of 500,000 won. This year, the monthly limit was reduced to 300,000 won with a 10% cashback, but only 6 billion won was budgeted. A city official explained that budget planning was difficult due to uncertainties in national subsidies, leading to a reactive approach of adjusting policies based on available funds.

Citizens are scrambling to maximize their benefits before they disappear. Lee Young-cheol, a 35-year-old from Incheon, pre-paid 400,000 won for upcoming dining expenses to secure the cashback before its suspension. Another resident, Ms. Shim, used her parents' Incheon Eum cards to spend 1.5 million won on dental treatment, even though it wasn't immediately necessary, to take advantage of the expiring benefits. These actions highlight the growing reliance on and the impact of the sudden withdrawal of these local currency incentives.