NH NongHyup Bank Pioneers Blockchain VAT Refunds with Avalanche and Mastercard

TLDR

• Stablecoins power Korea’s new instant VAT refund pilot for tourists.
• NH Bank tests blockchain automation to replace slow, paper-heavy refunds.
• Avalanche smart contracts enable fast, transparent VAT settlements.
• Global partners join Korea’s push for blockchain-driven refund systems.
• Pilot lays groundwork for future KRW-pegged stablecoin adoption.

South Korea’s NH NongHyup Bank has begun a proof-of-concept project using stablecoin technology to automate VAT refunds for foreign tourists. The initiative aims to simplify the refund process and improve settlement speed through blockchain integration. The bank collaborates with Avalanche, Fireblocks, Mastercard, and Worldpay to test the technical feasibility of stablecoin-based payments.

Collaborative Digital Pilot with Global Partners

NH NongHyup Bank leads the initiative to digitize Korea’s tourism refund system using blockchain and stablecoin infrastructure. The project uses Avalanche’s blockchain to create smart contracts that automate refund settlements and ensure transaction transparency. Mastercard and Worldpay contribute payment infrastructure, while Fireblocks provides custody and security support.

The PoC uses simulated data, but it mirrors real-world processes to validate the model’s reliability. Through blockchain and stablecoin systems, NH NongHyup aims to replace paperwork with automated, transparent operations. This partnership demonstrates how regulated banking and decentralized technology can align to deliver faster and safer payments.

Tourists in South Korea currently follow a manual, paper-based refund process to reclaim their 10% VAT. The new pilot eliminates this inefficiency and creates instant settlements through stablecoin transfers. The project will help tourists and merchants receive payments more quickly, improving overall customer satisfaction.

Automating VAT Refunds through Blockchain Technology

The pilot focuses on blockchain’s ability to simplify refund chains through smart contracts. These contracts will automatically record, verify and execute VAT refunds in near real time. The stablecoin layer ensures quick settlements and eliminates delays caused by traditional banking intermediaries.

Blockchain technology enhances trust and accuracy by offering a transparent record for all parties involved. This reduces administrative costs and prevents refund errors or fraud. The new framework aims to redefine how cross-border refunds operate in a digital environment.

South Korea recorded 16.37 million international visitors in 2024, showing a strong need for scalable payment systems. The bank plans to expand the digital refund service after regulatory approval for KRW-pegged stablecoins. This move could make South Korea a leading hub for blockchain-enabled tourism finance.

Laying the Groundwork for KRW-Pegged Stablecoins

The PoC aligns with South Korea’s strategy to develop a regulatory framework for KRW-pegged stablecoins. The Financial Services Commission and the Bank of Korea are preparing stablecoin legislation expected by the end of 2025. The project helps authorities assess the practical use of blockchain and stablecoin mechanisms within controlled financial settings.

Stablecoins will play a crucial role in maintaining Korea’s monetary sovereignty while reducing reliance on foreign-backed digital assets. NH NongHyup’s approach integrates stablecoin payments with national financial systems, ensuring compliance and transparency. As a result, it supports the government’s vision for a digitally advanced, secure, and inclusive economy.

NH NongHyup positions itself as a key player in Korea’s digital transformation. The bank’s strategy combines blockchain innovation with regulatory responsibility, ensuring sustainable adoption. If the project succeeds, it could revolutionize refund processing and set a benchmark for stablecoin use in global tourism finance.

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