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How South Korea uses local currencies for basic income, COVID-19 relief payments

South korea local currency won

In South Korea, every person is entitled to a 100,000 won ($83) payout as COVID-19 relief. Some provinces already have local digital currencies and used this for the relief payments. Gyeonggi-do Province, home to 12 million people, is a good example. It already had in place a universal basic income for a year for those aged under 24.

Plus, the province has its Gyeonggi Money application, which is widely accepted in stores, but to help support small businesses, it targets shops with revenues of less than 1 billion Won ($830,000). If they have a card acceptance terminal, it is automatically enabled for the local currency and there is a 0.3% reduction in the card fees. Consumers can also purchase the currency at a 6% discount.

The key is that the money and hence the income support can only be used locally at these small businesses, and the income support has to be used within three months or it will expire.

So far, few of the currencies are blockchain enabled. Gyeonggi covers 31 cities and districts, each with its own currency. Some offer local paper currency, most provide pre-paid cards that can be used in conjunction with Google Pay, and three provide a digital currency. 

One of those is Gimpo Pay, which uses the Good Pay solution from telecoms firm KT. The other two are Seongnam City and Siheung City, which use a platform from the Korean Mint (KOMSCO). The Mint is also active in the digital identity space, another sector where Korea is ahead of the game.

KT also recently landed the deal for Busan City and its Dongbaekjeon currency, which is expected to turn over $258 million a year.

The local currency and basic income initiative have proven so successful that it has sparked a debate about an ongoing universal basic income in South Korea. Some have argued that it’s too expensive, and it makes no sense to give it to people in well paying secure jobs.

Image Copyright: tassel78 / BigStock Photo