$3,416 CBDC limit in South Korea's 7-Eleven pilot

South Korea has launched a national pilot program for its central bank digital currency (CBDC), with 7-Eleven stores participating by accepting CBDC payments from April 1 to June 30.

During this period, customers using CBDC will receive a 10% discount on all purchases.

The pilot involves 100,000 participants who can convert their bank deposits into CBDC tokens stored on a distributed ledger, with each token holding the same value as the Korean won.

The Bank of Korea, along with the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), announced the test to evaluate the feasibility of a CBDC in real-world transactions.

Moon Dae-woo, head of 7-Eleven's digital innovation division, emphasised that participating in the CBDC test accelerates the company's digital transformation.

"We are making multi-faceted efforts to operate stores efficiently using next-generation digital technologies," he noted.

Participants can use CBDCs not only at 7-Eleven but also in coffee shops, supermarkets, K-Pop merchandise stores, and delivery platforms.

However, transactions are capped at 5 million won ($3,416) during the test period.

CBDCs offer modernised payment features but are controlled and monitored by governments, unlike privacy-focused cryptocurrencies.

This aspect has raised concerns about privacy, as CBDCs could provide governments with extensive access to transaction data.

The pilot is part of South Korea's broader efforts to explore new monetary systems and improve payment efficiency.

The Bank of Korea initially announced the retail CBDC testing in November 2023, aiming to create a prototype for future monetary systems.