Moving Towards A CASHLESS Society: The Example Of China
Updated: May 28, 2022
The epidemic has altered customer behaviour and rewritten retail standards throughout the world. In recent years, the environment we've lived in has led to behavioural and technical changes that have affected every industry. This includes the payments industry.
The epidemic accelerated the transition to contactless and digital payments, but the use of cash in transactions was already declining. Global non-cash transaction volume increased by 14 percent in 2019, according to a new Gapgemini Research Institute analysis, the greatest growth rate in the last decade.
The end of currency is not yet fully defined, but several of the world's most powerful countries, led by China, are preparing for it.
Advances in technology and an appealing value proposition
Digital payments have long been a Chinese leader, with fintech companies collaborating with major e-Commerce and tech giants such as Alibaba (Alipay) and Tencent (WeChat Pay) to make them available to millions of people across China. Alipay and WeChat also pioneered proximity mobile payments using QR code technology, as well as using e-wallets to create a powerful digital ecosystem for merchants and consumers that extends beyond payments and touches every aspect of people's daily lives. Thus, it does not come as a surprise that China has introduced its own digital money.
Rolling out digital currency
In April 2021, China began issuing digital money to its citizens, becoming the world's first major economy to issue a blockchain version of its own currency, paving the way for the country to become a paperless society. As with mobile payments, blockchain-powered digital money offers several benefits including trust, transparency, security, and data processing reliability. Through the Bank of China's official app, more than 100,000 Chinese individuals have been able to try the new digital currency, allowing them to pay with it at selected retailers like Starbucks and McDonald's. The Chinese government intends to keep notes and coins in circulation for the time being, but will eventually digitize all of its currency. Furthermore, the Bank of China will oversee the digital yuan to limit volatility and position it as a formidable competitor to the US dollar.
What this means for the rest of the world
In China, a rising number of retailers do not take cash, which explains the popularity of e-wallets such as Alipay and WeChat Pay. Canada and countries such as Australia, the United Kingdom, and Europe had already begun to embrace digital payments prior to the pandemic, and the United States, which had been hesitant to convert, discovered the benefits of proximity mobile payments in the last year and are now accelerating the change in their own consumer market. Even if China is a step ahead due to digital payments playing such an important role in people's lives, the massive amount of innovation that occurred globally during the pandemic, as well as the speed, security, and convenience of non-cash payment options, will lead other countries to follow China's lead.
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