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

[stompix]

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.

So, everybody is suffering in Sweden? Are they seeing a diminishing GDP, less spending?
Not from what I'm reading.

And furthermore, there was no government involvement in this trend, and the ones you claim are the responsible for this are actually against it:

People in Sweden barely use cash — and that’s sounding alarm bells for the country's central bank

Really, lately, you've gone back to your old habit of seeing conspiracies everywhere!!

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.

I think not only merchants but the cashiers are also happy...
You just tell the client what to pay and wait for him to use his cards, no more counting notes, no more double checking what he gave you, no more arguing "I gave you a 20!" , and you're safe from paying a simple mistake out of your own pocket at the end of the day.

Personally, If I would have to count bills 8 hours day I would go nuts after a week...

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[jseverson]

Yeah, Sweden has also been running into such problems, as stompix mentioned. I don't even think it's the government's fault. I mean, the infrastructure is there, which is why they've been having problems in the first place. It's just that not everyone is ready for it yet.

What's interesting is that Bitcoin is always being touted as a way to increase financial inclusion, when technology itself can mean a higher barrier of entry, as these situations have shown. I do think that's going to change in the near future with people getting more used to technology, but the poor will need to be able to afford these tools themselves all the same. It's going to be interesting watching these cashless societies go, because their situation might mirror Bitcoin's future.

[Hydrogen]

So, everybody is suffering in Sweden? Are they seeing a diminishing GDP, less spending?
Not from what I'm reading.

And furthermore, there was no government involvement in this trend, and the ones you claim are the responsible for this are actually against it:

People in Sweden barely use cash — and that’s sounding alarm bells for the country's central bank

Really, lately, you've gone back to your old habit of seeing conspiracies everywhere!!

The link you posted explicitly states "85% of sweden's population has access to electronic banking".

This means: 15% of sweden's unbanked demographic will suffer if a cashless society is implemented.

I would be curious to know, what part of this is a "conspiracy".  

Imagine there is an island city with two bridges. One bridge can be utilized by anyone as the cash/paper money bridge. The other bridge requires a bank account or access to electronic transactions to use. The owners of the electronic transaction bridge want to shut down the cash/paper money bridge so everyone is forced to use the bridge they themselves own & have control over. This would grant them a monopoly or centralized market which they could then leverage for their own gain. It is a good move for the owners of the single bridge, for everyone else is it likely a bad arrangement.

When in human history has a monopoly or single option ever been preferable to having multiple options? From this precedent alone it might be derived that having less options translates to increased suffering due to the higher potential for abuse and exploitation. That appears the rational and natural precedent which can be projected from known circumstances. Feel free to share your own conclusions.

[TheClownSong]

Cashless society soon or later will happen. Information technology including internet user growing very fast and peoples can use internet making transaction more faster and easier. I am believe in next 5 years, people will not using paper money for their transaction anymore except in place without internet connection

[pawel7777]

...
The link you posted explicitly states "85% of sweden's population has access to electronic banking".
This means: 15% of sweden's unbanked demographic will suffer if a cashless society is implemented.

Nice fake quote. There's no "electronic banking" mentioned anywhere in the article. There's "online banking" though. The difference is you don't need to be registered for online banking to use credit/debit card or use payment apps, making your conclusion that 15% must be un-banked baseless.

That's not to mention we don't know who's included in that 15% of un-online-banked. This number could include young people who are yet to open their first account, or newly arrived 30-something-year-old "Syrian refugee" children from Afghanistan.

[timerland]

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?

I wouldn't say that they can't "afford" a cashless society, considering that one is already pretty much in full swwing at the moment.

But there are obvious flaws to such cashless society where the cashlessness is brought through technology developed by private companies, whose technology may not suit everyone. Also, it's not really that there is a cash shortage, it's that people may get left behind when cash is no longer an option for them, and restricts them from transacting online as well.

Apart from that, obviously in the long term, cashless society discussions will definitely encompass bitcoin as one of the main viable options as well. But right now, adoption rates are still low, especially in China which has quite varied demographics.

[naidray]

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.

Unfortunately, the older generation does not understand they are living a borrowed time. That is even by the way. Normally, we do not always expect a change to just occur rapidly without having some setbacks most especially from the government. If they feel that the big merchants are the cause of the shortage of paper money, then so be it.

The world is advancing in technology by the day, what is the advantage of the paper money anyway, at least, money is money as long as you can use it to pay for a value in whichever form it is, and I wonder why the Chinese government will want to be creating a huge fuss about it.

[KingdomHearts]

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.

The cost of implementation will of course be expensive not only in US but in the rest of the countries as well. Almost all the people would need to have access to the technology and to the internet to make things happen.

The shift has already been seen in countries like Venezuela where the printing the money was more costly and would rather lower the value of money so this system was introduced. The cryptocurrency system can very well be established but it will take a huge time.

[tbterryboy]

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.

This is something that will happen as the world advances. We have so many problems in India. The infrastructure is not up to the standard, natural catastrophes have an adverse effect on the masses which was seen in the recent Kerala flood. Having these problems at head, how can you think about making your society cashless when majority of the people do not have access to electricity let alone crytpocurrency.

[stompix]

The link you posted explicitly states "85% of sweden's population has access to electronic banking".

This means: 15% of sweden's unbanked demographic will suffer if a cashless society is implemented.

I would be curious to know, what part of this is a "conspiracy".  

As pawel7777 has said before....really? It states exactly that explicitly?


About the conspiracies....

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.

The 1% elitists that brush their teeth with caviar while the rest of the population works in slavery..bla bla bla..

Imagine there is an island city with two bridges. One bridge can be utilized by anyone as the cash/paper money bridge. The other bridge requires a bank account or access to electronic transactions to use. The owners of the electronic transaction bridge want to shut down the cash/paper money bridge so everyone is forced to use the bridge they themselves own & have control over. This would grant them a monopoly or centralized market which they could then leverage for their own gain. It is a good move for the owners of the single bridge, for everyone else is it likely a bad arrangement.

When in human history has a monopoly or single option ever been preferable to having multiple options? From this precedent alone it might be derived that having less options translates to increased suffering due to the higher potential for abuse and exploitation. That appears the rational and natural precedent which can be projected from known circumstances. Feel free to share your own conclusions.

Not for everyone else. I couldn't give an f-word about the cash bridge. I don't like to use cash, I don't want to use cash and when there is a guy counting bills and coins ahead of me at the store and taking forever I sometimes feel the urge to hit him with the POS.

As for the alternatives.... if cryptos would eliminate fiat...would that be a monopoly? 

But, back to the questions, I've asked you and you elegantly decided to bypass:

So, everybody is suffering in Sweden? Are they seeing a diminishing GDP, less spending?

Has any of that come true in the last decade since Sweden has taken this cashless path?

[Samarkand]

...
I don't like to use cash, I don't want to use cash and when there is a guy counting bills and coins ahead of me at the store and taking forever I sometimes feel the urge to hit him with the POS.
...

In my country they actually did a survey where they asked the persons, who operate
the cashier in a major supermarket chain which payment method is faster (paying cash
or paying with a debit / credit card). The overwhelming majority expressed the opinion that paying cash is
much faster than card payments. Keep in mind that these are the persons that make hundreds of
transactions a day and probably can make an educated guess about this topic.

Maybe you have just been unlucky or selectively remember the few times where someone actually
took forever to count a few coins.

...
Cashless society means that everyone needs a mobile device or a personal computer.
...

In most developed countries this is already nearly the case and the few remaining people will
switch eventually or will simply die (many of the people, who don´t own either device are probably
the really old persons).

[stompix]

~

In my country they actually did a survey where they asked the persons, who operate
the cashier in a major supermarket chain which payment method is faster (paying cash
or paying with a debit / credit card). The overwhelming majority expressed the opinion that paying cash is
much faster than card payments. Keep in mind that these are the persons that make hundreds of
transactions a day and probably can make an educated guess about this topic.

Maybe you have just been unlucky or selectively remember the few times where someone actually
took forever to count a few coins.

I really wanna see that survey and how it was taken since;
https://www.huffingtonpost.com/john-rampton/how-mobile-payments-will-_b_9386860.html

More importantly, as already mentioned, these type of mobile payments are more secure than traditional payment methods and EMV. They’re also faster when checking out. The Smart Card Alliance says that “Chase has reported that customer time at the POS is reduced 30-40%, and American Express has reported that contactless transactions are 63% faster than cash and 53% faster than using a traditional credit card.” MasterCard found that “12-18 seconds were shaved off the purchase time as compared to cash” in drive-throughs.

You might be able to beat a card payment with PIN if you have exactly the right amount of money already prepared and there is no change involved but nothing, absolutely nothing can be faster than a contactless payment.

Tomorrow morning when I'll drop by the store to pick up whatever I'll need I'll start the chronometer on my smartwatch the moment the clerk is done with the scanning. and stop it once the receipt is out. I'm curious about this myself  

LE:
As I promised, 8.4 seconds!

 

[vagsun]

Not only China, other country too can't afford a cashless society. Cashless society is just imaginary, practically its not possible. There are many countries which are having very less literacy rate, although the literate countries too have some portion of illiterate people. So there illiterate people will face many difficulties in operating smartphones or PC's. So imagining a cashless society is a wacky thing.

[magneto]

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?

What I see is that in China, in most cities at least, mobile phone adoption is so high anyways that going cashless doesn't necessarily affect many people since everyone already has the technology to do it anyways.

There are concerns, for example, people who live in absolute remote areas with no internet connection could be left behind on this. Also, potentially people who don't have valid identification cards may also be affected.

China's probably going to continue going cashless at this stage, it's interesting that their approach is to have two competing cashless wallets though. Also, there is no paper money shortage as far as I know of. All there is is that people are increasingly less willing to deal with the hassle of change and pieces of paper.

[figmentofmyass]

What I see is that in China, in most cities at least, mobile phone adoption is so high anyways that going cashless doesn't necessarily affect many people since everyone already has the technology to do it anyways.

There are concerns, for example, people who live in absolute remote areas with no internet connection could be left behind on this. Also, potentially people who don't have valid identification cards may also be affected.

hundreds of millions of people in china don't have access to formal banking. paying for something through alipay requires a bank account. opening a bank account in china requires a valid passport and usually also an employment pass, student pass or work permit---that will never happen for a substantial part of the population. then there's bank account maintenance fees.

and then what do they get in return, besides losing all privacy in their transactions? the privilege of saving 12-18 seconds at the counter? great!!

[0xBitcoins]

A mania for mobile payments is leaving the poor behind.

As payment by phone accelerates in China, the reach of the biggest digital corporations are making its banking regulators uneasy. In Chinese cities, paying via the ubiquitous WeChat platform is now so common that vendors often have trouble making change for cash, or sometimes refuse to take it altogether. That’s prompted pushback from the state-owned banks. Anhui province’s branch of the People’s Bank of China (PBOC), recently began a working group to tackle the problem. Wang Yazhou, a senior banking official in Hefei, the province’s capital, commented a thorough cleanup was needed because refusing cash payments would be likely to have a very negative impact.

Regulators like Wang are right to be concerned. The growing “cashlessness” of Chinese cities threatens to expose underlying issues of economic instability. Mobile payments are carving out lines between young and old, and between the prosperous urban middle class and those left behind by the boom times. Mismanaged moves to mobile payments by municipalities could also lock the elderly and the poor out of the consumption economy—just when the Chinese government needs as many spenders as possible to drive forward the country’s economic transformation.

The policy question being debated is whether mobile payments can legally substitute for the renminbi, China’s currency. Specifically, regulators are looking to see if “cashless city” initiatives and the like violate China’s Renminbi Management Regulations. This law contains a clause that distinctly defines the renminbi as “the legal currency of the People’s Republic of China” and says that “within China’s national borders, the usage of renminbi for transactions by work units or individuals cannot be revoked.”

At the same time, the numbers suggest that cashlessness is rising and here to stay. January 2017 data reported by the Cyberspace Administration of China showed that 469 million users were registered on a mobile payment platform, and found an increase of 31.2 percent in total registered users compared to 2016 numbers. The China Internet Network Administration Center, another government bureau that collects usage data, indicated that the proportion of mobile payment usage in transactions rose from 57.7 percent to 67.5 percent from the end of 2016 to the end of 2017. In the cities, vendors ranging from brand-name stores to street food stalls have slapped colorful QR Code stickers from Alipay and Tencent—China’s two giant internet firms, which dominate online payments—near cash registers.

Bolstered by these promising numbers, the mega-corporations that run the cashless transactions applications are ramping up promotional events and municipal lobbying initiatives. In the early 2010s, online vendors pioneered “shopping holidays,” events such as Singles’ Day (Nov. 11—four lonely ones in a row) when purchases peaked thanks to deep discounts. The new events build on those, further normalizing cashless payments. In August 2017, Alibaba, Alipay’s parent company, rolled out “Cashless City Week” events in its home city of Hangzhou, as well as in Wuhan, Fuzhou, and Tianjin. Tencent’s WeChat Pay followed suit with a similar promotion that played off the auspicious date of Aug. 8, naming it an annual “Cashless Day.” However, bowing to pressure from Wuhan’s PBOC branch, wording for these promotions were later changed to “better respect consumer choice” in payment platform availability.

In many cities, cashlessness is so common that panhandlers and street musicians use WeChat and Alipay QR codes to ask for change. But these anecdotal cases obscure some of the class-related issues that cashlessness can’t fix, and may worsen. The 2017 World Bank Global Findex database, which measures financial inclusion, estimated that some 200 million Chinese rural citizens remain unbanked, or outside of the formal financial system. Cashless payment systems by design require formal enrollment in banks, which are then tied to the mobile payment platforms that WeChat and Alibaba host.

When apps are built on the assumption that residents of a specific community are formally enrolled in a bank or financial institution, the unenrolled are simply locked out of being able to pay. As a 2017 report from the Consultative Group to Assist the Poor indicates, close to 70 percent of rural Chinese remain offline and require a compelling reason to acquire the smartphone and bank account needed to utilize mobile payments. As these digital platforms attempt to become the default form of payment, China is facing a critical challenge to get its unbanked citizens caught up to financial inclusion standards.

The question of how accessible cashless payments truly are within China is an active, vibrant debate within domestic policy circles. A 2017 op-ed series in the Beijing News raised concerns that shifting invoicing systems to cashless ones without consulting rural communities or individuals would introduce risks: In communities that are cash-only, if individuals find themselves shut out of the financial system, they will be unable to conduct economic transactions related to agricultural equipment, seeds, and other purchases for farming.

Even as regulators and finance analysts worry about these gaps, Alibaba and Tencent remain determined to push cashlessness further into everyday life. Chinese firms are borrowing from the tactics and lingo of Silicon Valley CEOs determined to sell their products as socially valuable. In rural areas, both companies are investing resources and relying on their platforms’ unique characteristics to try to capture potential market shares of rural users of mobile banking products. Alibaba, which grew its revenues via the Taobao shopping site and supply chains, is in the tail end of a 2014 to 2019 10 billion renminbi spending spree to build e-commerce service centers in rural China. Tencent, on the other hand, relies on WeChat’s role connecting migrant workers to family members in rural areas to get more mobile payment users onboard.

Older users are another critical demographic targeted in cashless platform promotion campaigns. Because older users tend to struggle learning to use mobile devices, for example, Alibaba takes advantage of filial piety to encourage children to recruit parents and elders into getting on the apps. In a recent campaign to get more elderly users up to speed on using Alipay, Alibaba mimicked the language of a heartfelt child-to-parent note as an introduction to a tutorial on setting up mobile payments.

Alibaba and Tencent can issue lofty mission statements about bringing more users into the fold. But to them, the size of coverage disparities aren’t an overall problem as long as urban users keep the money flowing through their respective apps. They lose nothing substantial when lower-income, lower-technology, or unbanked users struggle to participate, because mobile transactions are still a massively growing sector. However, PBOC branches do, because lower spending and renminbi circulation reflects poorly on different provinces’ economic numbers—and, eventually, on the economic health of the whole country. When corporate needs and government objectives clash in China, however, the government tends to win. Yet the attraction of investment and the glamor of tech may give the payment firms the leverage they need to keep reaching for revenue opportunities.

How Chinese individuals, businesses, and communities can adapt to the prevalence of ubiquitous cashlessness will determine survival in a burgeoning but unequal digital economy. If China goes cashless without widening the opportunities to participate, the end result may exacerbate economic inequality in China even further—and leave rural provinces frustrated even as the country’s biggest corporations thrive.

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?

Not like I am I am surprised they will want to have to push it on the private sectors. As far as I am concerned, there is a huge anti-capitalist sentiment in everything said by the Chinese government. Well, not so surprised that would come from a democratic dictatorship setting.

I am sure in some way this is the main reason they would not really want to be having much to do with cryptocurrency in the long run, as that simply shows how threatened they are to it.

[ahmad21]

Yes, I think this applies to most of the countries, if not all, especially the developing ones. Most of the countries are yet also experiencing wide gap between rural and urban lifestyle. Huge amount of population is unaware of smart and internet connection. I think cashless society can be a reality only on paper, in real world I don’t think it can be implemented at least for the next two decades. Moreover problems like poverty and illiteracy can't really be solved using Bitcoin or other innovative cryptocurrencies.

[spongegar]

I'd have to agree, i mean there would be alot of infrastructures to build to make a nationwide crypto currency happen. For one thing, internet access must haopen all over the land. I mean they use Fiat as a transition or even place a lesser tax on people who want to use crypto currency. There are lots of ways to do it if they have political will.

[sinkfish]

most of the city dwellers are accustom to cashless payment. Cash mainly use by foreigner, old people, back water community or black market and illegal business. if you living a honest life in China, cashless payment binded to bank is the way to go.

[gostop]

I have read a lot of comments. I think everyone is too limited. Many people don't see the future. To know that China's cashless society has formed, they have surpassed the world for decades! Cashless cryptocurrencies can also be implemented globally. However, a cashless society does not mean rejecting the circulation of banknotes, but can spread in both directions. Hey, look at your comments and think that you are ignorant. I have been to China, I suggest to study.