Residents could have a discount and cashback, while merchants do not pay fee when using local currency
./Illustrated by Lee Da-young
“Local Currency? Is that not just for elderly people?” This is the reaction when people hear the word “local currency.” Or some people think it can only be used in the market. However, these are all old sayings. Recently, many local governments are using local currency, issuing it with credit cards, or showing the form of “pay” embedded in smartphones like Samsung Pay. The local currency was actively used in traditional markets where many people visited during Chuseok, Korean Thanksgiving Day, last September. Now local currencies are evolving and offering many benefits.
Local Currency can be used as money
In 1983, Courtney, which is a small town in Vancouver Cananda, experienced financial difficulties due to a slowdown in the timber industry and the relocation of the U.S. Air Force base. At that time, the unemployment rate soared to 18 percent, and people had no cash in their pockets. However, then, a man named Michael Linton created a currency that only works in that region, which was named the “Green Dollar.” This is the beginning of the local currency. It spread rapidly around the world in the 1990s and has been actively tried by local governments in Korea, recently.
Local currency can be used as cash in a particular region, as the name suggests. It can be thought to be similar to a gift certificate. However, it is not just paper money like a gift certificate. There is a local currency in the form of a card, which is used as a way of charging and linking it with an applet, which is only for local currency, like a check card. Nowadays, also, it has evolved into “Pay” and is penetrated into many people’s cell phones. Users can use local currency in many restaurants, cafes, convenience stores, and hair salons in the neighborhood. Furthermore, it can be used for taxi fares, too.
The positive purpose of local currency
The local currency was made with some good intentions. First, local currency was created to help local merchants. Therefore, it can only be used in small businesses and cannot be used in large discount stores or some franchises. It also aims to revitalize local domestic demand. In Incheon City and Gyeonggi-do Province, where many people commute between their city and Seoul, the local economy is poor because residents do a lot of economic activities in Seoul rather than their regions. In this case, the local currency helps revitalize the local economy. This is the same in other regions. For example, Gunsan City became an employment crisis zone after many factories closed last year, but sales increased because of the local currency. Also, western district of Incheon saw a 21.7 percent increase in tax revenue.
The current state of local currency
The local currency is currently being used by 177 local governments, including local governments which are planning to implement it by the end of this year. Its size is 2.3 trillion won, playing a major role in Korea’s economic means. Gimpo introduced “Gimpo Pay,” and its issuance surpassed 4.8 billion won in three months. The current status of use of Bucheon surpassed 20 billion won in only five months. The total value of Gyeonggi-do Province surpassed 200 billion won in four months. Incheon Eum Card has accumulated more than 320 thousand subscribers on the first anniversary of its launch. As such, there are a lot of people who use local currency, and its size is huge.
There is a preconceived belief that young people do not usually use the local currency, and it used only by older people. However, local currency these days is used by not only the older generation but also young people. In fact, on SNS contents which is dealing with local currency, there are some young people’s comments saying many young people around them, including themselves, use local currency a lot. Kim Kang-min(20), a resident of Incheon, said, “My sister and I use ‘Incheon Eum Card’ well. Also, I can easily find people who use local currency around me.” She also added, “Local currency is well made and I think those who know the benefits will use it regardless of age.”
The local currency is in the interests of both residents and merchants
Why are people using local currency now? Many consumers who use local currency praise its benefits. People can get incentives when using local currency. Also, cashback is available when we buy something or enjoy cultural activities. Finally, there are some discounts when we pay using local currency. Although rates of incentives and discounts and the amount of cashback are different from region to region, many people use local currency for these various benefits. The local government fills up the deficient amount of money. Lee Jae-eun, a resident of Seongnam City, Gyeonggi-do Province, said “Local currency is good because it can be used easily in residential areas and we can receive benefits without using cash.”
Merchants also benefit from the local currency. In almost every local government, merchants exchange local currency for cash at the bank without any fee being deducted. Considering that the card’s fee is usually 2.5 percent, exchanging these local currencies for cash is a gain. Also, as consumers who get benefits of local currency in area increasingly spend local currency, local merchants survive. Lee Jae-eun also said on this, “In stores, people do not use credit cards, so there are no fees, which could lead to higher income.
Advantageous and easy to use!
To be more specific, the use of local currency makes the whole region even more viable. Hwacheon, for example, has 15.9 times more value added effect than local currency issuance budget according to the Korea Research Institute for Local Administration. Also, According to Kunsan City, 66.5 percent of local currency franchises’ sales has rised and 73.2 percent of the respondents said local currency helped the local economy considering a survey by Gallup Korea, conducted last year. As such, local currency seems to have a lot of benefits for both individuals and the local region.
The best advantage is that it is easy to use for every user. “Zero Pay,” which is similar to local currency in that it was designed to help small business owners, is too hard to use. Users need to scan a QR code, and it takes relatively long time to pay compared to other payment methods. This is why Zero Pay is not used actively despite other great advantages. Even some stores do not accept zero payments because of the complicated payment procedure. By contrast, local currency is different. The local currency is in the form of gift certificates, cards, and Pay, which means it is easy and convenient for everyone to use. Seniors, who are not used to cards or especially Pay, can use the form of gift certificates. The older generation and young people can use the forms of card and Pay. This payment method is not much different from the usual payment method so that everyone can use it comfortably.
As such, the local currency is used by many people nowadays. However, some people see local currency as a waste of tax. Since taxes are used not only to fill up insufficient money but to issue and promote local currency. Nevertheless, local currency is making headlines in Korean society nowadays, and the number of users and the scale is increasing. Lee Jae-eun said “Although I am not an expert in this field, local currency is likely to be used well in the future, too. This money, which is good for both residents and merchants, is a loss if not used. I hope people who do not know it will start using this fantastic money as soon as possible”
Lee Da-young email@example.com
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