SEOUL, May 04 (AJP) - South Korea officially authorized the issuance of credit cards to minors aged 12 and older on Monday, institutionalizing a digital payment system that reflects the country’s rapid transition toward a cashless economy. The measure, which took effect May 4, replaces a temporary pilot program with a permanent legal framework under the Specialized Credit Financial Business Act.
The regulatory shift aims to eliminate the widespread but technically prohibited practice of children using their parents’ credit cards, so-called "Um-ka (mother's card)" for daily purchases. Financial authorities expect the formalization of youth spending to improve transaction safety, simplify loss-reporting procedures, and foster early financial literacy under parental oversight.
Financial Services Commission (FSC) Chairman Lee Eok-weon oversaw the implementation of amendments designed to increase the predictability of financial administration. The commission stated that the change provides a legal basis for "family cards" while expanding the business scope for credit finance companies.
Under the new rules, monthly credit limits for minors are set at a default of 100,000 won ($68). Parents may increase this threshold to 500,000 won if they provide explicit consent during the application process.
Usage is restricted to essential sectors including convenience stores, stationery shops, cram schools, and hospitals. The cards are strictly blocked at nightlife venues and gambling establishments to ensure funds are used for daily necessities and educational purposes.
The update also lowered the age floor for debit card issuance to 7 years old, down from 12. While debit cards were not previously restricted by law, South Korean banks had synchronized issuance with the minimum age for deferred-payment transportation features.
To address rising public transit costs, the monthly limit for these deferred transportation payments was doubled to 100,000 won. This allows elementary school students to pay for commutes digitally as cash usage continues to decline across South Korea.
"Institutionalizing these services provides higher predictability for administrative actions and expands the business scope for credit finance companies," The FSC head said.
The commission also modernized merchant registration by allowing non-face-to-face verification through mobile applications. This replaces the previous requirement for recruiters to visit business sites in person to confirm that a merchant is actively operating.
South Korea’s move mirrors international trends such as the "Credit Piggybank" concept in the United States, where some banks allow minors to use cards to build independent credit histories. Unlike the American model, which focuses on building individual scores, the South Korean system bills expenditures directly to the parents’ account and credit records.
The FSC intends to continue identifying regulatory tasks that reflect on-site demand to improve convenience for both small business owners and financial consumers.
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