China Can’t Afford a Cashless Society (Perhaps No One Can)

[lephuqui]

The use of cash along with other payments is necessary. Not every place is well developed to use payments on smartphone devices. Even in developed countries like the US or European countries, cash is still used.

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[1Referee]

You've lost me here completely. Are you honestly not seeing the progress in western world and globally (with few small exemptions) in terms of quality and comfort of life in the past few decades? No more illiteracy, virtually everyone with access to electricity/water/internet/sewer systems, even homeless junkies have smartphones, and the best one: lack of food is no longer a major problem for the poor - excess consumption and obesity is.

Seriously? No improvement?

You see them flying.

I'm referring to everything happening China and then mainly the lower class, that's what this thread is about, not the western world. Neither am I referring to external elements such as quality and comfort of life.

This is the best time to lift these people out of their economical exclusion, and as I said before, it's beneficial for the economy as a whole, so what's holding the government back to step in? Turn the unbanked into the banked and in a matter of years you'll see how significant the economical boost is. If the government isn't doing it, these people will remain unbanked for plenty of more years. That even reeks of intentional suppression.

[Sherwood_Archer]

Going cashless is still on its early stage. Right now, China, I think, is the only country who is actively promoting it although there are already countries who are now rapidly transitioning to it. It may still have flaws and issues right now and I am guessing when currency was first introduced centuries ago, there were also issues too. Same with checks and the like. Only time will really tell if going cashless will be really successful in a global level.

[r32godzilla]

Yes its not easy to turn such a big populous country in to cashless society and India too is struggling to do such thing.Its very difficult to change people's mindset immediately to leave traditional currencies and switch to digital cashless transactions and there are still huge volume of illiterate people and also older aged people who feel comfortable in staying with traditional fiat currencies.

[Faeton]

In my opinion, in the society there should be a certain balance of cash, non-cash settlements and circulation of the crypto currency. Of course, they will not exist in an equal percentage, each kind of money must take its place in society and all of them must walk in parallel with each other. Life exists in very diverse manifestations and every manifestation of it requires its own approach and its own, individual solution. No type of money in the end will not completely replace other types of money. A certain type of money can prevail, but not their other kinds.

[pinkflower]

https://foreignpolicy.com/2018/09/11/china-cant-afford-a-cashless-society/

....

This piece attempts to blame cash and paper money shortages in china on 3rd party payment apps like Wechat, Alipay and Tencent.

When people hear the term "paper money shortage" what comes to mind? Is this something that is likely to be the fault of private sector enterprise: corporations which build and implement electronic payment networks? Or is it more likely to be the fault of governments who produce and distribute paper money? I would be interested to know peoples feelings on this topic.

Would also be curious to know if anyone that reads this piece feels as if there is "anti-capitalist" sentiment present. Perhaps similar to the anti-capitalist sentiment pushed by venezuela which led to the severe deterioration of its private sector. Followed by loss of jobs, heavily reduced production via corporations in the country, etcetera.

No mention of bitcoin or crypto currencies, here. Should they also be considered in "cashless society" discussions? What are peoples thoughts on this?

Paper money shortage? The article was telling a story on how a growing % of people dont want paper money anymore because they would like to use electronic payments more. This is making a sector in China's society worry because the older generation and the low income sector do not have access to online and electronic payments. Its making them hard to transact with the use if cash. Theres no paper money shortage.

[Spaffin]

I think that the lack of paper money, this is a contrived problem. For each state it is not a big problem to include a printing press and additionally print a certain amount of paper money.
As for the transition to non-cash forms of settlements, our society is not yet ready to fully transfer to them. This is a long process, however, in my opinion, our society will never become non-cash. In any case, this will not happen in the near future. Cash is indispensable in many life situations.

[DgurJIupyf]

No countrie in the world (even China and USA) can't afford a 100% cashless society,because the implementation would be very expensive.Cashless society means that everyone needs a mobile device or a personal computer.Paper money are still way more convenient.

So good and i add comment. China is a socialist country, so there will always be rich and poor in this society. There is clearly visible difference between the classes. In a non-cash society, generally speaking, all 100% of the money will belong to the state (Bank), because they will temporarily issue a cash issue on request from a credit or debit card.
As for the Cryptocurrency, then the money does not belong to the state or the Bank, money from other people.
Example, in Germany almost (approximately) 80% of all money transactions are made by non-cash method. What not I'd say for other countries.

[electronicash]

change doesn't really happen faster than you can imagine but it has to start somewhere maybe in just a small city where they can start being cashless. i think there was already a cashless city, i remember there were news about a city in sweden. i'm just not sure which one. it really has to start somewhere until the mass adoption happen.

[Kakmakr]

I think a global epidemic has been the increase use of alternatives to cash. Merchants is starting to see the advantages of not having to deal with "dirty" paper money and having the higher risk of robberies when you have to collect a large amount of cash.

It is just more convenient and hygienic and safe to use alternative digital currencies and digital payment networks over cash. The informal sector will not have a problem with cash, because they collect much less than the larger retailers. Counterfeit fiat currencies also adds more cost to their business to detect that and also to prevent that. 

We are quickly moving towards a cashless society. 

[Ridwan Fauzi]

No countrie in the world (even China and USA) can't afford a 100% cashless society,because the implementation would be very expensive.Cashless society means that everyone needs a mobile device or a personal computer.Paper money are still way more convenient.

Even we grow more in terms of technology, I can’t still imagine this world without cash because its really convenient to have cash on your wallet. Governmern will not support this cashless society, cryptocurrency is just here to make faster transactions around the world and we should be happy for this kind of technology.

I think the problem is not cryptocurrency. The government can also make their currency become a digital currency and this is quite easy to do, and until now every community often uses a digital transaction system through their credit cards. And I see the benefits of the government when focusing the payment system into digital, one of which is that each transaction can be easily tracked by the government, in contrast to paper money, every person can make transactions in secret. The second advantage is that the government can easily monitor the circulation of money in the country.

[pawel7777]

I'm referring to everything happening China and then mainly the lower class, that's what this thread is about, not the western world.
...

Well, my bad I guess, but it's not obvious at all, especially when you clarified your point referring to governments (plural) - I took it as you switching to the general principles.
Not that it makes any difference. China is one of the best examples of quick transition from dirt poor country to relatively modern one. Saying that quote: "lower class in economical terms hasn't gone through any sort of improvement throughout the last decades" is simply wrong. Was the % of unbanked people few decades ago the same as it is today? If not, doesn't that show that huge number of lower class people actually experienced massive improvement (with big portion of them moving up from lower class)? Who do you think is responsible for that near 70% mobile transactions? Only rich and middle class?

Neither am I referring to external elements such as quality and comfort of life.

External how? Your comfort of life is not like the weather that just happens, it is very much dictated by the political conditions you live in (compare China Vs. North Korea for example).

This is the best time to lift these people out of their economical exclusion, and as I said before, it's beneficial for the economy as a whole, so what's holding the government back to step in? Turn the unbanked into the banked and in a matter of years you'll see how significant the economical boost is. If the government isn't doing it, these people will remain unbanked for plenty of more years. That even reeks of intentional suppression.

If those ~200 millions of unbanked Chinese are result of banks refusing them as customers - then yes, government should step in. If they're unbanked because they choose to be this way - then let them be, their children/grandchildren will progressively become more open to the new tech and problem will resolve itself.

[figmentofmyass]

This piece attempts to blame cash and paper money shortages in china on 3rd party payment apps like Wechat, Alipay and Tencent.

When people hear the term "paper money shortage" what comes to mind? Is this something that is likely to be the fault of private sector enterprise: corporations which build and implement electronic payment networks? Or is it more likely to be the fault of governments who produce and distribute paper money? I would be interested to know peoples feelings on this topic.

the problem here is there is a paradigm shift in the consumer economy, and that shift includes new barriers to entry. traditional cash-based economies don't shut out the unbanked poor---even homeless beggars on the streets can bring their change into a shop and pay for their dinner. that fundamentally changes when cashless payment systems like Alipay require formal enrollment with banks. 200 million+ unbanked is a lot of people. then you have to consider the technology barrier for older generations. i know my grandparents have always carried around cash---everything they do is cash. i wonder how they would fare in this situation, where businesses are actually refusing cash payments. the elderly aren't like kids; they won't pick up new technologies that easily.

No mention of bitcoin or crypto currencies, here. Should they also be considered in "cashless society" discussions? What are peoples thoughts on this?

i'm guessing they're too small to be relevant here. this seems like an issue primarily affecting the poor unbanked and the elderly---two groups i think aren't a big part of the bitcoin investor demographic.

[akosipepot]

I don't think China's decision on it's approach to digital currency would be deterministic for the rest of the world.

[pobeditelvezde]

I am sure that it is impossible to realize a cashless society because the world is not ready for that. Your look is focused on the crypto technologies and I suppose that you want a cashless society to be true but nothing is ready for that. I mean that it need to change the world financial system, the world economy, economy of all countries, people's mind and so on. It is impossible to do even in the far future and moreover there are no such intentions among the elites who govern the world. So I am sure that it is too early to speak about the world wide cashless socity.
I think that the most important troubles are to eliminate fraud from the crypto market that people will be able to trust the crypto market and to use crypto technologies more widely.

[crzy]

Yes its not easy to turn such a big populous country in to cashless society and India too is struggling to do such thing.

Every country will not become a cashless society, we used to live with it and cash is supported by the government. We should also consider those people who don’t know cryptocurrency or those who don’t want to use this technology. This is too good to be true, even in the next 15years.

[pinkflower]

I think a global epidemic has been the increase use of alternatives to cash. Merchants is starting to see the advantages of not having to deal with "dirty" paper money and having the higher risk of robberies when you have to collect a large amount of cash.

It is just more convenient and hygienic and safe to use alternative digital currencies and digital payment networks over cash. The informal sector will not have a problem with cash, because they collect much less than the larger retailers. Counterfeit fiat currencies also adds more cost to their business to detect that and also to prevent that.  

We are quickly moving towards a cashless society.  

Its isnt new. The world has been already moving towards a cashless society since Diner's Club introduced the first credit card in 1950. Credit card transactions might also already be composed of more than 40% of all the world's transactions, but I would like to see a citation if someone else can post it lol.

[Crypto Girl]

So the state could do it, but they won't probably for 2 reasons:

- some elderly people have no experience of non-cash technology and it could be to hard for them to switch
- "safety valve", cash is needed for crime (drugs, hookers and alike) and having total control and transparency of people's finance could backfire badly. It's actually healthy to keep some level of non-serious crime and allow people to vent-out.

Perhaps, the crimes nor money laundering can be lessen if we all in using banks in every transactions that we had. Since banks requires a lot of verification before you create a new account, people with evil plan will think twice to continue what their plan. Though, there's black market that obviously continuing ruin the system.
More likely no one can do that even a more develop country as goingng cashless is not easy as what we think since we should be considering a lot of aspects and surely government will be having hard time to convince everyone to cooperate especially those in remote areas. In an instance, we're like 30% cashless by using cards and online payment.

[Hydrogen]

I think there's a misconception present where people assume a cashless society is a natural and inevitable progression. Eliminating paper money in favor of cashless electronic transactions further centralizes currencies leaving consumers, businesses and individuals with fewer options. This reduction in options is correlated with reduced financial efficiency and reduced effectiveness in terms of spending. Over the long term this results in decreased GDP, reduced economic growth and other negative trends.

Some in the financial world push for a cashless society as it would centralize currency transactions in their favor. Eliminating competition between electronic transactions and paper transactions would create something further resembling a monopoly which would make it easier to exploit and take advantage of consumers. I think its safe to say a cashless society would only benefit less than 1% of the population. Everyone else would suffer as a result of cashlessness.

And so there's no reason to support it.

[Kakmakr]

I think a global epidemic has been the increase use of alternatives to cash. Merchants is starting to see the advantages of not having to deal with "dirty" paper money and having the higher risk of robberies when you have to collect a large amount of cash.

It is just more convenient and hygienic and safe to use alternative digital currencies and digital payment networks over cash. The informal sector will not have a problem with cash, because they collect much less than the larger retailers. Counterfeit fiat currencies also adds more cost to their business to detect that and also to prevent that.  

We are quickly moving towards a cashless society.  

Its isnt new. The world has been already moving towards a cashless society since Diner's Club introduced the first credit card in 1950. Credit card transactions might also already be composed of more than 40% of all the world's transactions, but I would like to see a citation if someone else can post it lol.

This is basically what I had said, because most people like the convenience of some kind of card to make their payment. Gone are the days when you had a wallet that you cannot close, due to all the small change and also the "dirty" stripper notes. 

When there was a Ebola outbreak, people died because it was rumored that people were infected by the cash that they stole from the dead bodies or from their houses. They simply could not burn good money. 

Add to that the countless in-store cards that are being issued and you have a perfect environment where cash is not being used anymore.