South Korea’s central bank, in collaboration with several financial institutions, has initiated a real-world pilot for its central bank digital currency (CBDC). The trial, which began on April 1, will run for two months and includes the participation of major retail and convenience stores, most notably 7-Eleven.
A CBDC is a digital form of a country’s fiat currency, issued and regulated by the central bank. It holds the same value as physical cash and is designed to function as a secure and efficient medium of exchange.
During this test phase, customers using the CBDC for payments at participating 7-Eleven stores will receive a 10% discount on their purchases. This incentive aims to encourage public participation and gather practical data on digital currency usage in everyday transactions.
Participating Banks and Registration Process
To take part in the trial, users must have an account with one of the seven participating banks. Registration is required in advance, with the program capped at 100,000 participants. This controlled scale allows authorities to monitor the system’s performance and user experience closely.
Once registered, users can convert their bank deposits into a equivalent deposit token. This token can then be used for both online and offline payments across a variety of participating merchants.
Where Can the CBDC Be Used?
The digital currency can be spent at several well-known retail chains and online platforms. These include:
- EDIYA Coffee, a major Korean coffee chain
- Kyobo Bookstore, a leading book retailer
- Various supermarkets and e-commerce platforms
- 7-Eleven, the only convenience store chain in the trial
Payments are processed by scanning a QR code from the user’s bank-issued digital wallet. A key feature of this system is its interoperability—payers and merchants do not need to use digital wallets from the same bank to complete a transaction.
Benefits for Merchants and Consumers
The Korean Financial Services Commission highlighted a significant advantage for businesses: instant settlement of sales proceeds. Unlike some existing electronic payment systems, which can involve delays, merchants receive funds immediately—similar to a cash transaction.
This efficiency can reduce the burden of liquidity management and lower transaction fees for businesses, as they are not required to pay additional fees to the digital wallet issuer.
Moon Dae-woo, head of the digital innovation department at Korea 7-Eleven, stated that the company is focused on integrating advanced digital technologies into its operations. Involvement in this CBDC pilot is seen as a strategic step to accelerate the company's digital transformation.
What Happens After the Trial?
Upon conclusion of the two-month testing period, any remaining deposit token balances held by users will be automatically converted back into their original bank deposit accounts.
Looking ahead, South Korean authorities plan to explore more advanced programmable functions for the digital won. These could include peer-to-peer (P2P) transfers and other application scenarios, further expanding the practical utility of a future CBDC.
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Frequently Asked Questions
What is a Central Bank Digital Currency (CBDC)?
A CBDC is a digital form of a nation's official currency, issued and backed by its central bank. It is designed to be a secure, digital alternative to physical cash for everyday transactions.
How does the South Korean CBDC pilot work?
Selected participants convert their bank deposits into a digital token, which they can spend at designated stores by scanning a QR code with their bank’s digital wallet app. The pilot tests the real-world functionality of this system.
What are the main benefits for merchants using a CBDC?
Merchants benefit from instant settlement of payments, which improves cash flow and reduces liquidity management burdens. They also avoid the transaction fees typically associated with other electronic payment methods.
Can anyone participate in the South Korean CBDC test?
No, participation is limited to 100,000 individuals who pre-register and hold an account with one of the seven participating commercial banks.
What will happen to my money after the pilot ends?
Any unused digital currency in a user’s wallet at the end of the trial will be automatically converted back into their regular bank account. No value will be lost.
What is the future of CBDCs in South Korea?
Post-pilot, the Bank of Korea will analyze the results to assess scalability, security, and user adoption. Future phases may introduce more complex features like programmable payments and offline functionality.