China says rejecting physical cash is illegal amid e-payments popularity

[Hydrogen]

SHANGHAI (Reuters) - China’s central bank on Monday warned that rejecting cash as a form of payment was illegal, saying that such practices could eventually could cause the loss of confidence in physical money and was unfair to those not accustomed to electronic payments.

Its comments, made in a post on its official WeChat account, come as electronic payments via Alibaba Group’s Alipay or Tencent Holdings’s WeChat have become increasingly popular in China where they are accepted on platforms such as public transport and at retailers like coffee shops.

The ease of use has meant that some vendors, especially in major cities like Beijing and Shanghai, have stopped accepting physical cash.

“Electronic payments has given us a new way to pay, but it must not replace cash payments,” the People’s Bank of China said. “Over time, the practice can become second nature and people could lose confidence in cash.

It added that it was particularly unfair to the elderly and people who lived in underdeveloped parts of the country who would have difficulty in mastering the processes needed for electronic payment.

The central bank also pointed out that some local authorities were promoting their technology advancements with taglines like “cashless city”, but said that this should not mean that they no longer accepted money.

https://www.reuters.com/article/us-china-payment/china-says-rejecting-physical-cash-is-illegal-amid-e-payments-popularity-idUSKBN1O902F

....

China appears to be adopting the inverse polar opposite of a cashless society.

This makes for an interesting contrast with other nations many of whom view a transition to cashless payment systems as being a natural progression.

If someone wanted to cite reasons behind china adopting the opposite of a cashless society, while many other nations of the world embraced the opposite abstract--how would they explain this? What would the main motive behind differences in policy be?

[Kakmakr]

This was to be expected from any government that wants to protect the value of their local reserve currency and also the impact on their economy. Everyone knows governments are manipulating the value of their reserve currency to artificially stimulate their economy, so it is naturally for them to react in this way, if something wants to replace their manipulation tool. 

We will get strong resistance from governments if we continue with the goals and visions of replacing Fiat currencies, we should rather promote co-existence with fiat currencies and then let the people decide what they want.   

[lihongjing]

There is nothing wrong with this, and such a rule is true. Banknotes can also be used after Bitcoin is successful, and should not be rejected for the birth of a better coin. In fact, they are all government-approved currencies. I believe Bitcoin will win.

[NeuroticFish]

China appears to be adopting the inverse polar opposite of a cashless society.

I think that the conclusion is incorrect.
Any government may try to convince you to use cashless means of payment because it's cheaper and easier to track. But they have to support the original paper currency too, it may be even in the constitution.
The "cashless" society will not mean in the near future that all the payments will be done without physical cash. Even a 75% would be already a huge percentage. And I guess they may push to 90-95%. Try to see the reality behind the commercials

On another side, also abandoning completely the "cashless society" direction would not surprise me. The ways of Chinese government are quite strange in many aspects, we know that.

[nicster551]

SHANGHAI (Reuters) - China’s central bank on Monday warned that rejecting cash as a form of payment was illegal, saying that such practices could eventually could cause the loss of confidence in physical money and was unfair to those not accustomed to electronic payments.

Its comments, made in a post on its official WeChat account, come as electronic payments via Alibaba Group’s Alipay or Tencent Holdings’s WeChat have become increasingly popular in China where they are accepted on platforms such as public transport and at retailers like coffee shops.

The ease of use has meant that some vendors, especially in major cities like Beijing and Shanghai, have stopped accepting physical cash.

“Electronic payments has given us a new way to pay, but it must not replace cash payments,” the People’s Bank of China said. “Over time, the practice can become second nature and people could lose confidence in cash.

It added that it was particularly unfair to the elderly and people who lived in underdeveloped parts of the country who would have difficulty in mastering the processes needed for electronic payment.

The central bank also pointed out that some local authorities were promoting their technology advancements with taglines like “cashless city”, but said that this should not mean that they no longer accepted money.

https://www.reuters.com/article/us-china-payment/china-says-rejecting-physical-cash-is-illegal-amid-e-payments-popularity-idUSKBN1O902F

....

China appears to be adopting the inverse polar opposite of a cashless society.

This makes for an interesting contrast with other nations many of whom view a transition to cashless payment systems as being a natural progression.

If someone wanted to cite reasons behind china adopting the opposite of a cashless society, while many other nations of the world embraced the opposite abstract--how would they explain this? What would the main motive behind differences in policy be?

It should be for now since many people are still using physical money and many of them also doesn't even know anything about digital money for now.

[tdrinker]

It's hard to think of any real reason for preventing the use of e-payments that still occur in their sovereign currency. All I can think of is that it stops a natural progression for people moving from sovereign e-payments through to non sovereign options like cryptocurrency.

Though the first line doesn't really sound like they're trying to stop people moving to e-payments, rather that they're trying to prevent people from rejecting cash as a payment option. This seems pretty valid and true for most countries as cash is legally accepted tender and you're not allowed to legally refuse it. At least I know that to be true for the UK.

[adzino]

Probably some business started to accept only e-payments over there and some what are being forced to use those online system which has become a huge problem for common people. Not sure though, just something that popped up in my mind. Anyways, this does not mean that paying through e-payment system has been made illegal. People can still use both online and cash system to make their payments. It is just that the business will have to accept cash when offered.

[LeGaulois]

Banknotes are backed by nothing, scriptural money/demand deposit is/are only virtual money that physically does not exist. Imagine an economy runs and based on real money/gold, forget paper gold, paper money, ETFs, Futures and the system collapse since the funds doesn't exist
China perfectly knows this and anticipate.

[jeromix]

of course, physical money should not be replace by an e cash payment. The e cash system is only an upgrade form of payment. We should understand that either way of the payment system shows successful transaction. It will only depend on the clients side on which he/she prefer to use in excahnging goods and products with his/her money.

[dothebeats]

What they're doing is just understandable IMO from an economic perspective as they're still promoting the circulation of money and still accepting e-payments. If people start to not accept physical cash anymore, this will hit the economy hard and might urge people to not do the same and be discouraged to receive and spend cash, causing a domino effect that could destroy China's blooming economy. They are not turning cashless or leaving physical cash behind but rather accepting another payment method that could co-exist with their cash.

[eternalgloom]

I don't really think that's too weird actually, lots of countries force businesses to also keep accepting cash payments.
It's pretty normal that you'd want people to be able to spend your nation's currency in as many ways as possible.

The advent of electronic payments shouldn't cause certain groups of people to be left out.

[BitHodler]

I actually consider a well diversified choice of payment to be a healthy form of progress beneficial to every layer of the economy. Also, being forced to use digital payment solutions significantly impacts your privacy.

I like that with cash you don't continuously being tracked by the store, bank, government, and so forth. Every bit of information they store can and will likely be used against you in the long run.

I have already seen that someone sharing pics on social media of a not so healthy life style being rejected from getting a regular cost health insurance. It was either pay a premium or try your luck elsewhere. That's scary.

[hubballi]

Both the options should be open and we cannot force the peoples to use only e-payment option. Just like what china government said is true that their are so many old peoples who still dont have much knowledge about latest technology so they will be facing lot of problem. Same their are so many places where still development is not happen due to lot of reasons so for them cash payment option is only available.

[Dimon8]

China is a country of bright contrasts, it is expressed in many aspects of life. Neither the government has ever given the right to choose its citizens (especially in China), this also applies to the use of funds. The Chinese government deliberately and systematically arrived at this decision. I live in a technologically poorly developed country in Eastern Europe, and my government plans to launch a national electronic coin in 2019. I think in 2019, many states will begin the transition to 100% non-cash payments. Thus it is easy to control all manipulations with the money of every citizen.

[el kaka22]

We do not need to really reject the physical cash to have e-payment options, I mean why not keep them both.

I understand the need for e-payments because they are making everything amazingly easy to deal with but they are not the only form of payment. Credit cards, debit cards, cash, cheque, gift cards and crypto all valid options for everyone. Of course, there are some places like taxi cabs that you only pay with cash because that is easier for such a business but even the online shops should be taking cash payments on delivery if they can afford to do so.

China, even though they hate crypto and make it obvious, could be right on this one, making an e-payment only shop is not a smart idea, it doesn't really think about what the customer wants, give the customers an option to select and if you want e-payments give them some incentives to choose epayments over other options.

[okala]

That makes it very difficult to keep fiat out of our monetary system.  We can only focusing on combining both e-payments and fiat as this is the major ways we can understand our financial system.  China governments has been against bitcoin and cryptocurrencies market for long-term and any things that said good about digital money they are against it.

[cellard]

This was to be expected from any government that wants to protect the value of their local reserve currency and also the impact on their economy. Everyone knows governments are manipulating the value of their reserve currency to artificially stimulate their economy, so it is naturally for them to react in this way, if something wants to replace their manipulation tool. 

We will get strong resistance from governments if we continue with the goals and visions of replacing Fiat currencies, we should rather promote co-existence with fiat currencies and then let the people decide what they want.   

I think the only reason they are now not so much against cash as they typically where, is simply because of Bitcoin. If Bitcoin was never invented, then people wouldn't have any other way but to use government digital tokens after they remove cash.

Since Bitcoin was invented, people can have a plan B, this destroys the dream of 100% control of flow of money governments. If they removed cash, it would be great news for Bitcoin, so I can see why they are now pushing for cash usage again.

[dmamigo]

Removing cash will be a problem, not every citizen of the society will be able to use online payment. And talking about cryptos, it is more complicated as of now. China has a huge population and it's not possible that every citizen is qualified to send or use technologies like this.
Moreover, e-payments are usually popular among the young citizens of every country. Mostly, Old people are still orthodox, quite a few of them have coped up with the advanced society.

[The Sceptical Chymist]

China appears to be adopting the inverse polar opposite of a cashless society.

I read it more as a statement that they don't want to implement it too soon.  They have a valid point about the elderly population who probably aren't ready for a cashless society to be thrust upon them--and I don't think it should be, not in China and not in any country.  I think it's a good move on the Chinese government's part to make the decision they did.

For better or worse, a cashless world is coming.  Such a thing would have been unheard of in the 1800s, and boy how times have changed.  I worry about power outages, loss of smartphones, hacking, too much trust in banks, and a few other things when I envision cashlessness.  People do love paying for things with plastic and with their smartphones, but I don't think cash should ever be made obsolete.

Mostly, Old people are still orthodox, quite a few of them have coped up with the advanced society.

Yeah, that's the big problem.  They're not ready for this yet and shouldn't be forced to abandon cash.  I don't see the need to rush the adoption of a cashless society.  As I said, it's a good move by China.

[1Referee]

Since Bitcoin was invented, people can have a plan B, this destroys the dream of 100% control of flow of money governments. If they removed cash, it would be great news for Bitcoin, so I can see why they are now pushing for cash usage again.

Even if 'pushing back' crypto adoption is their main motive, it won't have much of an effect in the long term at all. Whether it's crypto gaining ground or mobile payment forms based on fiat, digital payments will continue to grow as they have been doing for over a decade now.

In the end, Bitcoin right now isn't at the point it has any sort of ammo to compete with the big boys such as PayPal, AliPay, etc. If it isn't the infrastructure forming an obstacle, the volatility here will make sure people will always prefer to settle their transactions with fiat related payment forms. Money is meant to be free of hassle, which is an experience Bitcoin can't provide yet due to the speculative nature of this market.