(C) Inside Small Business

SEOUL — While the transition toward a "cashless society" is picking up pace in South Korea, a paradoxical trend is emerging: people are spending less cash but holding onto more of it for emergencies.

According to the "2025 Survey on Currency Usage by Economic Entities" released by the Bank of Korea (BOK) on the 28th, the average monthly cash expenditure per individual stood at 324,000 KRW. This marks a sharp 36% decline from the 506,000 KRW recorded in 2021. Cash now accounts for only 17.4% of total monthly spending, down from 21.6% four years ago.

The "Cash Paradox": Spending Less, Hoarding More

Despite the decline in daily transactions, the amount of cash kept in wallets and safes has surged. The average "transactional cash" held by individuals rose to 103,000 KRW, a 25.6% increase from 2021. More notably, "precautionary cash"—money kept for emergencies—jumped by 52.8% to an average of 541,000 KRW per person.

The corporate sector showed an even more dramatic shift. While average monthly cash spending by businesses plummeted from 9.11 million KRW to 1.12 million KRW, their cash holdings nearly doubled to 9.77 million KRW. Roughly 36% of companies cited "securing liquidity for emergencies" as their primary reason for holding cash.

A Growing Digital Divide

The shift away from cash is not uniform across all demographics. The survey highlighted a persistent reliance on paper money among vulnerable groups. Cash usage remains high for those in their 70s and older (32.4%) and for households with a monthly income under 1 million KRW (59.4%).

Public Skepticism Remains

Public sentiment regarding a fully cashless society remains wary. Approximately 45.8% of individuals expressed opposition to the transition, significantly outnumbering those in favor (17.7%). The primary concern cited by 39.1% of respondents was the "transaction difficulties faced by the financially underprivileged," such as the elderly who may struggle with digital payment systems.

"Economic uncertainty and interest rate fluctuations are heavily influencing the public's demand for physical cash," a BOK official stated. "While the convenience of digital payments is undeniable, the role of cash as a safe-haven asset remains strong."

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