A cashless society is fast becoming a reality in Korea.

Cashless transactions here have already overtaken those made with notes and coins. Koreans use cash for just 20 percent of all payments they make.

According to a recent survey by the Bank of Korea, the average Korean carries 74,000 won ($65) cash and two credit cards in their wallet, withdrawing cash out of ATMs only three times per month.

Men and older people still prefer cash compared to Women and younger people, the survey found. 

“Spending less cash is a global trend found in every country,” said an official of the Credit Finance Association. “People are embracing more diverse payment methods as well as credit cards.”

There was a time when credit cards were considered a social evil after the nation suffered the credit crisis of the early 2000s. Companies overissued credit cards and binge spending was prevalent, with more than 4 million people delinquent at the time.

But now the social taboo has gone. Instead, credit cards have continued to transform along with the growing trend toward electronic money. Banks and card companies are turning their eyes to mobile payments services, competing head-on with tech companies.

Tech giants such as Samsung and Apple have recently launched their own mobile payment services in key markets, because their leadership in the soaring market allows them to attract more loyal customers and elevate device sales in the longer term.

The Korean government also plans to go cashless with aims to cut social costs and improve transparency in financial transactions overall. As part of the efforts, it aims to ditch coins by 2020.

Experts predict cashless payments will also help reduce the underground economy and increase taxable sources that are now hidden.

“The nation’s high credit card ownership is a favorable condition to spur a cashless society,” said Kang Im-ho, a professor at Hanyang University and a member of the advisory panel for BOK’s plan.

Koreans use credit cards for almost 80 percent of payments, as compared to the U.S. where about 47 percent of payments are still made with cash.

When it comes to going cashless, Scandinavian countries such as Sweden and Norway are the front-runners, with people in the region relying on cash for less than 6 percent of all payments.

Despite the enhanced convenience and innovation behind a cashless society, experts warn about risks, such as security and privacy issues. The elderly and marginalized groups also could have limited access to electronic payment methods.

By Lee Ji-yoon (jylee@heraldcorp.com)