Phase Two: Key Features and Retail Scope
Published 6/22/2026, 1:46:30 PM
South Korea’s CBDC initiative, Project Hangang, entered Phase Two in March 2026. This phase represents a shift from technical feasibility to practical retail utility, focusing on peer-to-peer (P2P) payments, programmable government subsidies, and expanded merchant integration to compete with dominant private payment providers like Kakao Pay and Naver Pay [Source: https://www.google.com/search?q=South+Korea+CBDC+phase+two+program+details+2025+2026].
Phase Two: Key Features and Retail Scope
Phase Two expands the ecosystem by introducing complex transaction types and onboarding major high-volume retailers to simulate real-world consumer behavior.
- Programmable Subsidies: A core retail feature is the distribution of government vouchers (e.g., childcare or cultural subsidies) as "programmable" tokens. These can be restricted to specific categories or vendors, ensuring funds are used for their intended purpose [Source: https://www.google.com/search?q=Bank+of+Korea+CBDC+pilot+phase+2+retail+adoption+features+timeline].
- P2P and Offline Payments: Unlike the merchant-only focus of Phase One, Phase Two tests direct person-to-person transfers and offline capabilities, allowing transactions to occur without an active internet connection [Source: https://www.google.com/search?q=Bank+of+Korea+CBDC+pilot+phase+2+retail+adoption+features+timeline].
- AI Agent Integration: The Bank of Korea (BOK) is exploring the use of AI agents that can autonomously negotiate and purchase goods or services on behalf of users within the CBDC framework [Source: https://www.google.com/search?q=Bank+of+Korea+CBDC+pilot+phase+2+retail+adoption+features+timeline].
- Expanded Merchant Network: Major discount retailer Daiso joined the program in February 2026, joining existing participants like 7-Eleven, Ediya Coffee, and Kyobo Bookstore to provide a broader data set for retail transactions [Source: https://www.google.com/search?q=South+Korea+CBDC+phase+two+program+details+2025+2026].
Timeline of Development
| Date | Milestone | Key Outcome |
|---|---|---|
| April – June 2025 | Phase One Pilot | 100,000 participants tested deposit tokens at select retailers. |
| Nov 2025 | Public Demand Study | 21.8% of users expressed willingness to replace existing methods with CBDC. |
| Jan – Feb 2026 | Phase Two Prep | Governor Rhee confirmed 2026 launch; Daiso announced participation. |
| March 2026 | Official Launch | Formal commencement of Phase Two retail and P2P testing. |
| June 2026 | Current Status | Active testing of P2P, vouchers, and cross-border capabilities. |
Challenges to Retail Adoption
Despite the technical advancements, several hurdles remain for mass adoption:
- The "Credit Card" Hurdle: BOK research indicates that while consumers prefer CBDC over cash, they still prefer credit and debit cards due to established reward programs like cashback and points, which the CBDC currently lacks [Source: https://www.google.com/search?q=South+Korea+CBDC+phase+two+program+details+2025+2026].
- Low Initial Utilization: During Phase One, only 42.1% of allocated funds were actually spent, suggesting that "safety" alone is not a sufficient driver for consumers to switch from existing digital wallets [Source: https://www.google.com/search?q=Bank+of+Korea+CBDC+pilot+phase+2+retail+adoption+features+timeline].
- Infrastructure Costs: A dispute over a 30 billion won (~$22 million) infrastructure cost between the BOK and commercial banks remains unresolved, potentially slowing the rollout of necessary merchant terminals [Source: https://www.google.com/search?q=South+Korea+CBDC+phase+two+program+details+2025+2026].
- Privacy Structure: To mitigate surveillance concerns, the BOK uses a two-tier system where commercial banks issue "deposit tokens." This ensures personal transaction data remains with the bank rather than the central bank [Source: https://www.google.com/search?q=South+Korea+CBDC+phase+two+program+details+2025+2026].
In summary, Phase Two moves the digital won into the hands of everyday users through P2P and government spending, but its success depends on whether the BOK can provide incentives that rival the rewards of Korea's deeply entrenched credit card culture.
Next Steps:
- Would you like a deep dive into the technical specifications of the "deposit tokens" used by commercial banks in this pilot?
- I can monitor for any updates regarding the 30 billion won infrastructure cost dispute between the BOK and participating banks.