Public transportation systems are still clumsy to use. If you are in the stone ages of technology, you are standing in queue to buy your ticket. Then joining another queue to get your ticket verified and enter the station. And not to forget, you are asked to tender exact change at the ticket counter; another hassle. If you are in the more developed world, you need to carry a card that helps you pass through without any stops, and then what? Your digital e-money experience stops once you get down the train.
On the other side of the world, South Korea has not just revolutionized public transportation, but moved one notch further to transform its financial systems and the way people transact. South Korea is literally making “paper money” a thing of the past. Even better, it is on its way to make your wallet an unnecessary accessory. Now a mobile phone can do everything your wallet does and much more. This is led by the fast technology adoption in Korea
Korea is creating a cashless world
The primary reason for the prevalence of cashless transfers and change in consumer behavior in Korea is T-Money – “A smartcard that enables NFC based cash transfers”.
T-Money was introduced in 2004 to help standardize the payment service for public transportation in Korea. It is a smartcard that you can carry, and swipe at any T-Money card reader to pay instead of cash. It is available as a smart card and as an integrated mobile chip embedded in your phone, making it easier to carry. One can simply recharge the card at the 58,000+ T-Money Card Recharge machines or other convenience stores. With T-Money, you can take a cab, catch a bus, hop on the subway, have food, make purchases at convenience stores and even send gifts to your loved ones. And the Killer Feature: All of this can be done with only your smartphone in your hand – no cash, no cards. They are fun too; they even come in different mobile charms (keychain kind of accessories) that you can carry along with your phone.
Story behind T-Money and its creation
The Korean government has played a key role in the introduction and growth of the T-Money service. It started in 2004, when the Seoul Metropolitan Government decided to reform the public transport system of the city. T-Money - a unified electronic ticketing system was introduced as part of the reforms. It was implemented by Korea Smart Card Co (KSCC) Ltd. The technology was so widely accepted, it was easily extended to other services like cabs, convenience stores, vending machines, parking spaces, toll gates, convenience store purchases, in fact almost everything that people have traditionally used cash or cards for on a daily basis.
The success of T-Money
Korea has become a model for the rest of the world to embrace in leveraging technology. Korea is now the forerunner in electronic money and transaction systems. T-Money now generates close to 50 million+ transactions per day with over 100+ million cards having been issued i.e. twice the population of South Korea. KSCC manages almost $19M per day in settlements for the transactions made through T-Money.
T-Money is not just restricted to the more tech savvy younger generation, but, almost everyone including kids, teens, adults and grandparents use this service in their day to day life.
Where does the “Rest of the World” stand in comparison?
Unlike Korea, where Smart Cards are used for everything, including transportation, retail and even gifting. The rest of the world is still lagging in its adoption of cashless transfers. The trend of cashless transfers has not seen enough people backing it in private or government sectors. Most Smart Cards in other countries have been restricted to public transportation only. Only a few countries like the Octopus Cards in Hong Kong, EZ-Link in Singapore have widespread usage similar to T-Money in Korea.
This gap in implementation in other countries has turned into an opportunity for Korean companies. Korean companies are working to build “Smart Card Automated Fare Collection Services” similar to T-Money for these countries. One such example is New Zealand where KSCC is helping them by providing back-end support to implement the service. T-Money in Korea is referred to as the best system to study and emulate by a number of developed countries. Recently, the Korean company LG CNS (which jointly owns KSCC) announced that it is building an e-ticketing service in Greece. LG CNS is leveraging its strength and learning from the Korean market.
Cashless money transfer is becoming ubiquitous in Korea and has significantly influenced people in their daily activities. The rest of the world is at-least a decade behind Korea, both in terms of operations and the vision to implement such a system.