South Korea has launched a national initiative to expand blockchain-based digital payments through a deposit token infrastructure project aimed at lowering payment costs for merchants and accelerating the adoption of next-generation payment technologies.
The Korea Internet & Security Agency (KISA) and the Ministry of Science and ICT announced on July 22 that they had held a joint launch ceremony with participating organizations at KISA’s Seoul office. The initiative marks the official start of the Deposit Token-Based Payment Infrastructure Expansion Project, which seeks to broaden the use of blockchain technology in the country’s payment ecosystem.
The project was selected as part of this year’s Blockchain Innovation Leading Project, a government demonstration program designed to identify and promote blockchain-based services capable of generating broad economic and social benefits. The program focuses on practical applications that support everyday economic activity while creating new business opportunities.
Following an open call for proposals, the deposit token initiative was selected after an evaluation conducted by an independent panel of experts. Authorities indicated that the project would be carried out through close cooperation with several government institutions, including the Ministry of Economy and Finance and the Bank of Korea, with the objective of expanding the practical use of deposit tokens and improving implementation outcomes.
The project aims to expand blockchain-based deposit token payments across the private sector while reducing payment processing costs for micro and small businesses.
Consortium Brings Together Banks and Payment Providers
The Korea Financial Telecommunications and Clearings Institute will lead the project through a private-sector consortium consisting of nine commercial banks, eight payment service providers, and two major demand-side partners. The initiative has been allocated a total budget of 9.6 billion won.
The project builds on experience gained during the Bank of Korea’s Project Han River, a pilot program that explored the use of central bank digital currency (CBDC)-based deposit tokens. Authorities now intend to extend those capabilities into commercial payment environments where consumers and businesses can directly benefit from blockchain-enabled settlement.
The Korea Financial Telecommunications and Clearings Institute also plans to collaborate with the Ministry of Economy and Finance to expand the use of deposit tokens into public finance applications, including business operating expenses. Officials expect this broader adoption to increase the project’s overall economic impact.
Existing Payment Infrastructure to Be Retained
One of the project’s defining characteristics is that it will operate without requiring merchants to replace their existing payment infrastructure. Instead of introducing new payment terminals, the system will utilize current point-of-sale devices and online payment networks.
Consumers will make payments through deposit token electronic wallet applications provided by participating banks. Authorities are also reviewing the possibility of introducing physical payment cards linked to the new system.
The infrastructure is designed to work with existing payment terminals and online networks, allowing merchants to accept deposit token payments without investing in new hardware.
Officials expect the new payment and settlement framework to improve transaction speed and operational efficiency while lowering payment processing fees for small merchants. In addition to reducing costs, blockchain technology is expected to strengthen transparency and oversight within public finance management by enabling policy-based spending conditions and improving the monitoring of fund usage.
Support for Blockchain Industry Growth
The Ministry of Science and ICT also views the initiative as an opportunity to strengthen South Korea’s blockchain ecosystem by creating practical use cases that encourage wider industry participation.
Approximately 3 billion won of the project’s budget will be directed toward development, operations, and promotional activities involving small and medium-sized enterprises, startups, and information technology companies. Participating commercial banks are also expected to undertake additional projects valued at approximately 4.5 billion won alongside the main initiative.
Government agencies expect the project to accelerate blockchain adoption, support innovative services from startups and technology firms, and strengthen South Korea’s broader blockchain industry ecosystem.
Shin Dae-gyu, head of KISA’s Digital Infrastructure Division, indicated that the project represented an important milestone toward establishing a nationwide payment environment based on deposit tokens. He also said the infrastructure was expected to encourage information technology companies and startups to develop innovative services and new business models. He added that KISA would use its expertise in blockchain technology and information security to help ensure the delivery of secure, reliable services while supporting the nationwide expansion of the project’s outcomes.