Initial Success: Wallet Adoption and Transaction Volume

The Bank of Korea’s (BOK) recent experiment with deposit tokens, a form of digital currency, has yielded encouraging initial results. Within the first month, approximately 57,000 deposit token wallets were created, representing about 60% of the targeted 100,000 participants. This rapid adoption suggests a strong public interest in exploring digital payment alternatives.

Shinhan Bank’s Delivery App Leads in Deposit Token Usage

Transaction data reveals that Shinhan Bank’s delivery request, Ding, is a significant driver of deposit token usage. Roughly one-third of the 15,000 deposit token payments made during the initial phase of the experiment were processed through this platform. This success can be attributed, in part, to Shinhan Bank’s strategic offering of discount coupons to customers using deposit tokens within the app.

The expansion of use and the convenience of payment are inevitable as the convenience of payment is a test environment.

Lee Jong-ryul, Deputy Council, Bank of Korea

Uneven Participation Among Banks

While the overall adoption rate is positive, participation among different banks has been uneven. Kookmin Bank and Shinhan Bank quickly reached their allocated wallet quotas, with Kookmin Bank temporarily suspending new wallet openings.Othre participating banks, including Hana, Woori, Agricultural Cooperatives, Companies, and Busan Bank, have yet to reach their targets. The BOK initially allocated 16,000 wallets to each of Kookmin, Shinhan, Hana, Woori, and Nonghyup Bank, and 8,000 to Companies and Busan Bank.

Merchant Adoption and Usability Challenges

Despite the growing number of wallets, the limited availability of merchants accepting deposit tokens remains a significant hurdle. While major retailers like Seven-Eleven and Kyobo Bookstore are participating, along with select Idiya coffee shops, Hanaro Mart locations, and online platforms like Hyundai Home Shopping, the overall ecosystem is still relatively small.This limited acceptance, coupled with reported usability issues such as the need to enter passwords multiple times, could hinder wider adoption.

For context, recent data indicates that cashless payments, including credit cards and mobile payments, account for over 90% of all transactions in South Korea. Deposit tokens need to offer a compelling advantage to compete with these established methods.

Benefits for Merchants and Future Expansion

Deposit tokens offer certain advantages for merchants, including immediate payment settlement and the absence of transaction fees. The BOK plans to expand the experiment in May by integrating digital voucher programs, such as the Seoul Youth Culture Pass Project and the Daegu City Education Voucher. This integration aims to increase the utility of deposit tokens and drive further adoption.

Looking Ahead: Phase Two and the Future of Digital Currency

The first phase of the experiment is scheduled to conclude at the end of June, followed by system maintenance and the launch of a second phase. This next phase will focus on enabling peer-to-peer remittances, expanding voucher program integration, and increasing the number of participating merchants. The ultimate goal is to assess the viability of deposit tokens as a complement to existing payment systems and to explore the potential of central bank digital currencies (CBDCs).

…the new digital -type private currency with programming will emerge as the digital payment method is internalized in the existing bank deposit.

Lee Myung-hyeong,Senior Researcher,Korea Financial Research institute

Experts believe that the success of deposit tokens could pave the way for a more efficient and secure payment landscape,possibly reinforcing the existing interbank settlement system with real-time capabilities.