Members of North Korea’s wealthy entrepreneurial class who purchased large numbers of mobile phone cards have lost a considerable amount of money following a new ban on the purchase and sale of “mobile money” for phone calls.  

A source in the country told Daily NK recently that many are expressing their anger at once again being tricked by the authorities, just as they felt they were tricked following the government’s currency reform in 2009.

“On order from the General [Kim Jong Un], the buying and selling of personal phone minutes was unexpectedly suspended around July,” a source in North Korea told the Daily NK in a phone conversation on Sunday. “Because of this, the mobile phone cards that money merchants [private financiers] had already bought became useless.”

USING MOBILE MONEY IN NORTH KOREA

In North Korea, if you pay the basic quarterly rate of about KPW 3,000 for mobile service, you get 200 minutes and KPW 150 in mobile money. For KPW 4 in mobile money, you can “top up” your phone for about a minutes’ worth of voice calls.

If you use all your minutes, you can go to a post office or authorized mobile phone shop, buy a mobile phone card and top up your phone using mobile money. In other words, you can buy more minutes using mobile money. You can use the mobile money yourself, or you can send it to somebody else.

Because of the ability to send mobile money to other people, North Koreans have been using it for money transfers and purchasing various items. Basically, what ordinary North Koreans have done is develop their own “convenient payment service” – an interesting development in a country where electronic payment options are scarce and bank services are inadequate. Payments and money transfers using mobile money have been quite popular among North Koreans since all it takes is a mobile phone.

Some members of the donju have been making a profit off the system by selling mobile phone cards they bought at a premium to people who have a hard time getting to post offices or phone shops themselves. Following the ban on the purchase and sale of mobile money, however, they can no longer sell those cards to other people.

“Alongside your own mobile phone, you can now top up only one phone belonging to someone else per day at a post office,” said the source. “There’s a 100 minute [around 400 won in mobile money] limit to how much calling time you can buy at one time, and you can no longer turn the minutes already on your phone into cash.”

North Koreans peruse cell phones on offer
North Koreans peruse cell phones on offer. / Image: Sogwang

The existing daily cap on how much mobile money North Koreans could transfer was KPW 500, and there were no limits on how many people they could transfer money to. The latest move to ban the purchase and sale of mobile money confirms that North Korean authorities now limit how many people mobile phone users can transfer money to and the fact that they have lowered the cap as well. 

Members of the donju can now only use the cards they have purchased to top up one person a day. The ban makes it so that a person cannot use a mobile card purchased by another person at a post office or other point of sale. 

According to the source, the North Korean authorities are warning that if they catch anyone illegally turning their mobile money into cash or topping off someone up above the upper limit, they will seize their mobile phone and punish them.

A DEAD-END FOR THE DONJU

The source said that ever since the ban was implemented, people who purchased large numbers of mobile phone cards tried to demand refunds, but were turned down.

“Members of the donju went to post offices or phone shops and asked for their money back, but it was no use,” said the source, who spoke on condition of anonymity. “The places just kept repeating that since the money had already gone into the state coffers, they couldn’t give it back.”

With so much money from the donju having been placed into state coffers, people are starting to wonder out loud whether this was all a way for the authorities to squeeze money out of the population. 

According to the source, post offices and phone shops are saying they cannot solve the refund issue since “the abolishment of the phone card system within the national communications fee payment system is a policy issue,” adding that because there are no rules governing this issue they are unable to “acknowledge” any losses.

The phrase “the abolishment of the phone card system within the national communications fee payment system” seems to mean that people can no longer use the cards due to the ban on the purchase and sale of mobile money.

The source says that members of the donju who took a serious financial hit because of the sudden policy change are making known their profound displeasure with the new ban. 

“The mobile money merchants suffered losses of anywhere from USD 1,000 to as much as USD 5,000,” said the source. “People who took pains to acquire their wealth are at a loss now that their wealth has disappeared.”

Meanwhile, the source said the new ban has not completely diminished mobile money as payment system. 

“[The measure] has banned exchanging mobile minutes for money, but it didn’t completely suspend the use of mobile money,” the source said. “[The authorities] banned it because some donju and USD-RMB money changers had taken a system meant for topping up just your own mobile minutes and turned it into private commerce – in short, selling [cards] at a premium.”

This means that the ban is aimed at ending private loan businesses and suggests that North Koreans can still use mobile money to top up their own mobile minutes.

Please direct any comments or questions about this article to dailynkenglish@uni-media.net.

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Mun Dong Hui is one of Daily NK's full-time journalists. Please direct any questions about his articles to dailynkenglish@uni-media.net.