Foreigners’ domestic card usage increases for the second quarter due to the spread of vaccines and easing of restrictions on movement
▲ Bitcoin. AP News
Despite the increase in outbound travelers, it was found that the value of cards scratched abroad decreased. This is attributable to the strengthening of management measures to prevent illegal foreign exchange transactions related to virtual assets such as Bitcoin and Ethereum, and the increase in the won-dollar exchange rate (decrease in the value of the won and rise in the value of the dollar), which has led to a decrease in spending, such as direct purchases abroad.
According to the Bank of Korea on the 30th, during the third quarter (July-September), the amount of overseas card use by residents, including credit cards, debit cards, and debit cards, was only $2.88 billion (3.3 trillion won). This is a decrease of 14.8% (US$500 million, 576 billion won) compared to the previous quarter. However, compared to the same period last year, it increased by 32.7%.
(Bank of Korea)
This was primarily due to the fact that credit card companies tightened the limit of withdrawals from overseas ATMs to prevent illegal virtual asset transactions. In fact, during the second quarter, the use of debit and debit cards showed an upward trend, increasing by 72.8% and 48.3%, respectively, from the previous quarter. According to the data submitted by the Korea Customs Service for a state audit, the exchange rate for virtual asset investment from January to August of this year amounted to 810 billion won.
The won-dollar exchange rate also had an impact. The actual average won/dollar rose 3.2% (36.12 won) from 1121.23 won in the second quarter to 1157.35 won in the third quarter.
By card type, debit cards recorded $810 million, down 38.1% QoQ, and debit cards down 31.7% QoQ to $20 million. Credit cards, on the other hand, rose 0.5% to $2.5 billion.
Han Jae-chan, head of the Bank of Korea’s Capital Movement Analysis Team, said, “As credit card companies tightened their withdrawal limits to prevent illegal remittances related to virtual assets such as Bitcoin, overall spending has decreased. The increase in the exchange rate by about 30 won also had an impact on overseas direct purchases,” he explained. “It is difficult to predict the direction of the fourth quarter,” he said. This is because there is a lot of uncertainty, such as the recent appearance of a mutated virus Omicron,” he added.
On the other hand, domestic usage by non-residents increased by 7.3% ($60 million) from the previous quarter to $933 million (1.8 trillion won). This is the second consecutive quarterly increase since the 6.9% ($60 million) increase in the second quarter. Compared to the same period of the previous year, the increase continued for the second quarter.
“The spread of the vaccine itself increased, and the increase in the number of inbound travelers as the movement restrictions were eased,” explained Han explained.
Meanwhile, the number of outbound travelers increased from 226,000 in the second quarter to 356,000 in the third quarter, and the number of inbound travelers increased from 222,000 to 270,000 during the same period, respectively.
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