Lessons we can Learn from China to Go Towards a Cashless Society
Just imaging you are going shopping and you left your wallet there in Home, but you do not have to care! OR you have an empty pocket, And still you don’t want to care! If you visit China anytime soon this will not be a surprise for you.
Same like in most of the other countries, but more than other countries China has gone digital, and their ever-evolving Fin-tech and Digital Payment echo system is growing in a rapid pace where the rest of the world can look to China for adopting strategies that will help move economies of other countries towards a cashless society. Promoting and supporting the digitization and cashless payments Chinese government is playing an active role in building a world-class infrastructure as an investor, developer, and consumer and same time Chinese regularity authorities push the Bank Financial and Retail sector to replace cash with electronic payments.
“China is being transformed into a world digital leader according to the McKinsey Global Institute.”
Led and Run by the popular and of the world’s most valuable mobile apps by AliPay and WeChat Pay, Chinese citizens/consumers adopted payments mobile apps, Wallets, Smart Phone, Wearable and online eCommerce that combines social media and banking, avoiding and skipping the fiat currency, credit and debit cards.
There are few factors that considered by certain countries including China when moving towards a cashless society,
- Access to financial services
- Macro-economic and cultural factors
- Merchant scale and competition
- Technology and Infrastructure.
How China has taken the lead and What they did Right?
- Society/Consumers willing to adopt the Digitization.
- Regularity changes, Sponsorship and Influence from Regularity Authorities.
- High Debit Card penetration while Low with Credit Cards.
- Growth of their own Payment scheme. (China Union Pay — CUP)
- Higher usage of Smart Devices and Mobile Payment Apps Penetration.
- Huge investment and availability on Technology and Infrastructure.
- First to capture the Global Market (AliPay, WeChat Pay etc.)
- Widespread usage of Online, e-Commerce, Social Media with the Internet boom.
Because of above factors, China is now the largest cashless, e-commerce market in the world and hundreds of millions of Chinese citizens now conduct their daily business using everything from standard credit cards to futuristic app-based mobile payment platforms.
“China has harnessed the power of mobile payments and wallets, leading it to become a mobile-first market. In fact, mobile payment transactions in China added up to more than $13.0 trillion in 2018.”
“In China 40% of the population carries “almost no cash” while 85% of all consumer transactions throughout the world are still done in cash.”
“Third party payment channels such as Baidu, Alibaba and Tencent are further progressing FinTech and the mobile industry, with more than 70 percent of all e-commerce transactions occurring via mobile payments.”
“Companies like Visa and Mastercard struggle to make inroads into China itself. UnionPay’s monopoly makes it seem set for eternal growth as a permanent fixture of the landscape in China”
“China accounts for more than 40% of the value of worldwide e-commerce transactions, up from less than 1% about a decade ago. China has also become a major global force in mobile payments with 11 times the transaction value of the United States.”
While those things happen in China most of the other countries are lagging or nowhere near reality to adopt cashless Eco system for there society because of their regulations, culture and a lack of infrastructure, payment options and electronic payment ecosystems kind of barriers.
When it comes to Cashless payments QR codes is doing a significant role there in China, which Chinese consumers & merchants adopted it positively with regularity changes to speed up there payment transaction in a secure and widely accepted way while it was failed to gain popularity there in the most of the western countries because of regularity barriers.
In India, which has a high number of mobile penetration and still has a higher rural community still has their retail transactions (approximately 90%), done in either cash or check because of their regularity, cultural barriers and peoples believes.
However, with the fast phased evolution of the cashless digital financial industry in the world led by China, it is nothing surprise that other countries also will follow and do the changes to their FinTech landscape, and disruptive technologies like Internet of Payment Things, Blockchain, BigData, AI, and Cloud will add the flavor of icing on top of that to transform the businesses society. All of these effort to move towards digital alternatives to cash to improve and secure their economies.
“Digital and Mobile payment options like Ali Pay, WeChat Pay, Apple Pay, Venmo, Zelle or Paypal are generally faster and more secure than Traditional payment methods like cash, checks and cards.”
“The Internet of Payments space is an appealing in Banks and other FinTech companies that can help drive innovation in the payment space through the use of NFC chips, payment apps, sensors, tracking devices, etc. Some of the world’s biggest payment services provides are aiming to capitalise on this trend.”
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Sources:
http://www.paymenteye.com/2018/07/31/the-competitors-for-the-crown-in-chinas-cashless-future/
https://mobilepaymentconference.com/can-learn-chinas-cashless-society/
