South Korea has launched a ₩9.6bn (£5.4m; $6.9m) nationwide project to move everyday card and mobile payments onto a new system built on central bank digital currency (CBDC) infrastructure.
The initiative aims to cut settlement costs and fees for small businesses by using so‐called “deposit tokens” – digital versions of commercial bank deposits issued on top of the Bank of Korea’s wholesale CBDC platform.
From wholesale CBDC pilot to high-street payments
The Korea Internet & Security Agency (KISA) and the Ministry of Science and ICT announced that the scheme, officially started on 22 July, will extend the Bank of Korea’s wholesale CBDC trial, known as “Project Hangang”, into retail payments used by shops and consumers across the country.
The project has been selected as part of the government’s 2026 Blockchain Innovation Leading Project, which funds large-scale demonstrations of blockchain technology in public services and new commercial applications.
It will be led by the Korea Financial Telecommunications and Clearings Institute (KFTC), the organisation that already operates much of South Korea’s interbank payment and clearing infrastructure.
A consortium of nine commercial banks, eight payment gateway firms and two major merchants has joined the effort. Together they will design and test payment services that run on deposit tokens rather than today’s traditional card and account-transfer rails.
Using existing terminals, new wallets
Rather than replacing card terminals nationwide, authorities intend to layer the new system on top of existing infrastructure.
Under the plan, KFTC will connect the current payment network to Project Hangang’s CBDC-based backbone, allowing participating institutions to process deposit token transactions through the same banking channels they already use.
Consumers will be able to pay with deposit token wallet apps issued by their banks, and officials are examining the introduction of physical payment cards linked to those wallets. Retailers would keep using their existing point-of-sale terminals, avoiding costly hardware upgrades.
KISA says a key goal is to convert the lessons from the wholesale CBDC pilot into services “for the general public”, while lowering settlement expenses and easing payment fees borne by smaller merchants.
Government spending and programmable money
Officials intend to test the technology beyond private-sector shopping.
Deposit tokens are expected to be trialled for government business expense programmes and later connected to dBrain, South Korea’s digital public finance platform, to support treasury operations and other forms of public expenditure.
By using programmable blockchain features, authorities say they will be able to pre-define how and where money can be spent, and improve transparency at every stage of the payment process.
The Ministry of Science and ICT also argues the initiative will bolster South Korea’s domestic blockchain sector. Around ₩3bn of the total budget has been earmarked for development, operations and promotional activities involving small and medium-sized enterprises, start-ups and IT companies. Participating banks are expected to invest a further ₩4.5bn in related projects linked to the new payment infrastructure.
‘First stage’ of a national token network
KISA Digital Infrastructure Division Director Shin Dae-gyu said the programme marks the “first stage” of building a deposit token payment environment and could open the door for start-ups and IT firms to create new services on the platform. He added that KISA will use its blockchain and cybersecurity expertise to support a secure rollout.
The launch comes shortly after documents reviewed by the Korea Federation of Banks indicated that the Bank of Korea and lenders had discussed operating deposit tokens on an ongoing basis, as they work towards eventual commercialisation.
The next phase of Project Hangang is expected to go beyond basic payment validation, adding more users and merchants, enabling person-to-person transfers and allowing individual banks to develop their own deposit token products. Business-to-business treasury payments, including government subsidies tied to electric vehicle charging infrastructure, are among the proposed use cases.
Banks have previously told the central bank that this second phase would need far greater investment than a simple extension of the current pilot, as it would require full anti-money laundering controls, fraud detection, suspicious transaction reporting and new operational systems. In response, the Bank of Korea has revised its timetable and offered commercialisation consulting to participating institutions.
Deposit tokens, not stablecoins
South Korean authorities have repeatedly stressed that deposit tokens are distinct from stablecoins, even though both use blockchain technology.
Deposit tokens represent existing commercial bank deposits recorded in token form within a wholesale CBDC framework run by the Bank of Korea. Stablecoins, by contrast, are separate digital assets backed by reserve holdings and overseen under a different regulatory regime.
The new payment project sits within a broader digital finance agenda. Earlier in July, the government set out a roadmap to make the won a fully convertible currency and to introduce legal rules for won-backed stablecoins under a proposed Digital Asset Basic Act. The plan also includes further development of wholesale CBDC infrastructure, pilot schemes for tokenised government bonds and participation in the Bank for International Settlements’ Project Agora for cross-border payments.
In parallel, financial institutions are testing private blockchain payment models outside the CBDC framework. HashKey Group, Kbank and BPMG have agreed to study won-based stablecoins for cross-border trade and settlement, while Toss Bank is working with the Solana Foundation on stablecoin-powered international remittances.
Unlike those initiatives, the Bank of Korea’s deposit token programme keeps the central bank at the core of the system, using tokenised commercial bank money rather than privately issued stablecoins as the foundation for a new era of digital payments.
