The Korea Internet & Security Agency (KISA) and the Ministry of Science and ICT said on the 22nd that they held a joint launch ceremony of related agencies for the "deposits token-based payment infrastructure expansion project" at KISA's Seoul office on the 22nd and will push to spread a Blockchain-based digital payment infrastructure.
This project was selected this year as a task for the "Blockchain innovation leading project." The Blockchain innovation leading project is a demonstration program that discovers and spreads Blockchain-based services in areas with large spillover effects, such as supporting the livelihood economy and creating new markets.
This year, through an open call for free themes, the "deposits token-based payment infrastructure expansion project," which aims to ease small merchants' burden of payment fees, was finally selected after review by an evaluation committee of outside experts. The project will be promoted by establishing a cooperative system with related agencies, including the Ministry of Economy and Finance and the Bank of Korea, to expand the scope of deposits token use and improve outcomes.
The Korea Financial Telecommunications and Clearings Institute will serve as the lead agency, with nine commercial banks, eight payment service providers, and two large demand-side partners participating in a private consortium. The total project cost is 9.6 billion won.
The goal is to expand to the private payment sector—where the public can feel the benefits—the institutional "Central Bank digital currency (CBDC)"-based deposits token pilot experience accumulated in the Bank of Korea's "Project Han River," and to ease the burden on small merchants. In addition, the Korea Financial Telecommunications and Clearings Institute plans to work with the Ministry of Economy and Finance to broaden use to public finance areas such as business operating expenses, thereby amplifying the project's spillover effects.
A feature of this project is that it does not build a separate payment environment but uses existing terminals and online payment networks. Users will be able to pay through banks' deposits token e-wallet apps, and the introduction of physical cards is also under review.
Merchants, including small businesses, will be able to accept payments in deposits tokens without replacing their payment terminals. Once a deposits token-based payment and settlement system is established, it is expected to speed up and improve the efficiency of settlement processing while lowering payment fee rates for micro and small merchants, helping to ease small merchants' burdens. In the area of treasury fund management, it is also expected to contribute to innovation in public finance management by using Blockchain technology to assign conditions aligned with policy goals and prevent improper use in advance through transparent execution management.
Through this project, the Ministry of Science and ICT plans to create user-facing cases of Blockchain technology while expanding opportunities for development, operations, and service diffusion in which Blockchain corporations such as small and midsize companies and startups can participate, thereby strengthening the competitiveness of Korea's Blockchain industry ecosystem. About 3 billion won of the total project budget will be invested in development, operations, and promotion tasks involving small and midsize companies, startups, and information technology (IT) corporations. Participating organizations, including commercial banks, also plan to separately promote additional projects worth about 4.5 billion won in connection with this project.
Shin Dae-gyu, head of KISA's Digital Infrastructure Division, said, "This project is the first step in fully implementing a payments environment for deposits tokens, and it will serve as a catalyst for various information technology (IT) small and midsize companies and startups to create innovative services and new business models based on the infrastructure built by this project," adding, "KISA will support the implementation of safe and reliable services based on its expertise in Blockchain and information security and help ensure the results spread nationwide."