Payment preference for CBDC in Korea: over cash and mobile fast payment but less preferred than cards; adoption rate as the most preferred payment method ranging 19−27% of respondents – study.

The authors of the BIS Working Papers  |  No 1296 predict that „CBDC, when introduced, will be preferred over cash and mobile fast payment but less preferred than credit and debit cards, with its adoption rate as the most preferred payment method ranging 19−27% of respondents”.

The authors of the report entitled „Predicting the payment preference for CBDC: a discrete choice experiment” examine how people in Korea may respond to the introduction of a retail central bank digital currency as a payment method. „Since no real usage data exist, we conduct a discrete choice experiment with more than 3,500 individuals, where participants evaluate pairs of hypothetical payment methods defined by attributes such as issuer, form of issuance, fees, timing of settlement and discounts.” – according to the report.

Contribution

The experiment design allows the authors to identify the role of each attribute in shaping payment choices and to predict demand for a retail central bank digital currency under different design scenarios. By validating the predictions against actual usage of existing payment methods in Korea, the authors show that this approach provides credible and reliable evidence for policy discussion.

Findings

Authors find that financial incentives, such as fees and discounts, have the strongest influence on payment choices, and issuer and form of issuance also matter significantly. Respondents show a substantially higher willingness to adopt payment methods when they are provided in the form of cards or smartphone apps, rather than banknotes. Also, older respondents in particular show greater trust in central bank-issued instruments, while younger respondents express stronger preferences for big tech and app-based options.

In simulations, retail central bank digital currency with a benchmark design is chosen as the most preferred payment method by 19% of respondents, ranking second to cards but ahead of cash and mobile payments. Predicted use increases further when it provides stronger financial incentives, highlighting that design features – including incentives, issuer credibility and issuance form – will critically shape its acceptance.