INCHEON — Cashback rewards on Incheon e-eum, the city's flagship local currency program, are back after being suspended when funding ran out. Within two days of the restart, timed ahead of the Chuseok holiday shopping rush, weekend spending on the platform surged more than 500%, reviving consumer demand that had been held back for weeks.
A policy analysis report from the Incheon Institute, released on the 22nd, found that Incheon e-eum did more than stimulate spending. It generated 1.4 times its cost in added value and 2.3 times its cost in spending within the city, the report said.
The city government said it restarted cashback support on the 18th, using 91.3 billion won in total funding — a second supplementary budget of 77.9 billion won plus 13.4 billion won in newly secured central government funds. The program had been halted in July when its budget was exhausted. The restart was originally set for the 21st but was moved up three days to capture holiday grocery shopping and weekend spending.
The effect was immediate. Over the first weekend after the restart, on the 19th and 20th, spending on Incheon e-eum totaled 28.2 billion won. That is a 513% jump from the 4.6 billion won spent on the previous weekend, the 12th and 13th. Through Sept. 30, the city has raised the monthly spending cap to 1 million won from 500,000 won and is paying 10% cashback, or 15% in the Ganghwa and Ongjin island districts. From October through the end of the year, the benefit continues with a monthly cap of 500,000 won.
One Won Spent Returns 1.4 Won: Institute Puts Fiscal Multiplier at 1.41
With the program running again, attention is turning to what the local currency actually delivers in return for the hundreds of billions of won in tax money it consumes.
The Incheon Institute analyzed 493.3 billion won in cashback paid over three years and found it generated 1.1372 trillion won in new spending within the city. That means every won of cashback produced 2.31 won of spending inside Incheon.
The value-added multiplier — the fiscal multiplier that economists use as a core measure of policy efficiency — came to 1.41. The figure means the city and central government money put into Incheon e-eum did not simply disappear as consumption spending but generated more than 1.4 times its value in real economic activity within the region.
The program also produced a production-inducement effect of 3.03 times the cashback paid, or 1.4947 trillion won, and an employment-inducement effect of 31.8 jobs per 1 billion won of cashback, for a total of 15,690 jobs.
57% of Payments at Restaurants and Corner Stores: The Sales Cliff Behind the 513% Surge
A closer look at where residents spent the money reveals the condition of the city's small commercial districts.
An analysis of cumulative payment data from 2022 through July 2026 showed restaurants and cafes accounted for the largest share at 30%, followed by general retail such as supermarkets at 17% and beverages and food — including traditional markets, butchers and seafood shops — at 10%. In total, 57% of all payments went to small neighborhood businesses serving everyday needs, not to large discount chains or department stores.
The concentration of spending in restaurants, corner groceries and food shops points to how severe the sales collapse was for these small merchants during the two months from mid-July to mid-September, when cashback was suspended. Incheon e-eum payments had accounted for 20% to 30% of revenue at neighborhood stores that depend on cash flow to survive, and when that stream stopped, merchants had to absorb the drop in customer traffic on their own.
By sales volume, more than 80% of payments occurred at small businesses with annual revenue under 3 billion won. After the city stopped paying cashback in September 2023 at merchants with annual revenue above 3 billion won, the small-business shift multiplier — a measure of spending moving to smaller stores — more than doubled, rising to 1.14 in 2024 from 0.56 in 2022.
Recurring Budget Gaps and the Island Paradox: Questions Over Sustainability
Behind the spending rebound, however, lie structural problems the city needs to address.
The first is a chronic budget cycle of stop and start. When the main budget runs dry, as it did in July, cashback halts until a supplementary budget pulls in borrowed or spare funds for a patchwork restart — a pattern repeating every year. With central government support made mandatory under the local currency act revised in August 2025, the city needs to institutionalize its central funding so residents and merchants can count on cashback running steadily through the year.
The second is the gap in merchant infrastructure in the island districts of Ganghwa and Ongjin. The city raised the cashback rate there to 15%, but an Incheon Institute survey found that 60.9% of island residents had stopped using the program, far above the 20% to 30% rate in the urban districts. The reason is a shortage of participating merchants. That is why some argue expanding the island merchant network should come before raising rates.
The third is overhauling add-on services and moving toward what the institute calls a local circular economy 2.0. The program's delivery and taxi services, both lightly used, need structural changes such as tie-ups with specialized platforms. The institute also recommended opening a business-to-business circulation system, allowing small merchants to use Incheon e-eum when buying intermediate goods such as food supplies from one another, rather than limiting it to consumer purchases at stores. Doing so would keep added value from leaking outside the region, it said.
Incheon Mayor Park Chan-dae said the city secured the 91.3 billion won in cashback funding through spending restructuring despite difficult fiscal conditions, calling it a promise to put household economics first. "We will protect to the end this virtuous cycle in which the benefit eases the burden on residents' shopping baskets and spending flows into neighborhood shops," the mayor said.
With 2.76 million users and 24 trillion won in cumulative payments, Incheon e-eum has become part of daily life for nine out of 10 residents. The Chuseok restart points to more than a temporary boost in spending: it underscores why the program should grow into permanent public infrastructure supporting the neighborhood economy, built on a stable funding safety net from both central and city budgets and on substantive platform improvements.
