The Small Payment Policy of South Korea (소액결제 정책) is certainly pivotal in the case of the country’s economy in the digital world, especially for gig workers and freelancers.
While mobile micropayment systems offer a high level of convenience, the presence of upper limits on transaction sizes presents considerable problems for independent workers who depend on digitized revenue flows.
The expansion of gig economy paradigms is further complicated by concerns about income potential, job floating, and overall financial mobility.
Freelancers and gig workers, for example, content creators, online tutors, or e-commerce sellers, perpetually face the need to utilize mobile payment systems, which can provide instant and hassle-free payment processing.
However, freelancers face far more complex cap issues due to the monthly cap of 1 million KRW, with most encountering a myriad of more complex processing payment matters. This constraint greatly hampers cash flow for those people with a large volume of transactions.
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The restriction of small payments affects freelancers on an individual basis, but it also has implications for the economy as a whole. Financial constraints for gig workers limit their spending, which in turn hinders economic growth.
Furthermore, the policy may bring about off-the-record payments, which would contribute to the growth of the informal economy.
South Korea, for example, could allow an increase in payment limits to maintain spending in the case of verified users as a means of supporting gig workers. Payment freedom could be issued through alternate platforms such as blockchain technology.
While the Small Payment Policy seeks to ensure financial accessibility, it imposes hurdles for the gig economy in South Korea. There are immense benefits for both the economy and the workers if these regulations are reformed.