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August 3, 2017

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Is e-payment fast rendering cash extinct?

MY wife is a Communist Party member and so are many of her colleagues.

Recently she told of an embarrassing situation in which she and a few colleagues had to hand in a total of 500 yuan (US$74) in party membership fees. Only cash was accepted. But all the cash they had added up to less than 300 yuan. They had to borrow the rest from others.

The reason that they didn’t carry much cash is that they don’t feel the need to, now that mobile payment tools are heavily relied upon for routine business transactions. From hailing a taxi to renting a shared bike, from buying a meal to getting an ice cream, payment can be made simply by scanning the QR codes shown in one’s Wechat Pay or Alipay accounts.

Since 2014, mobile payment solutions have expanded like a prairie fire in China, gradually overtaking cash and credit card as the most popular form of payment among young shoppers.

Save for some tiny establishments, a great number of retailers, restaurant owners and even public service providers have jumped on the e-payment bandwagon. And this is not just for appearing trendy — it could mean life or death amid the red-hot competition to woo tech-savvy young consumers.

Compared to those clinging to their phones and habitually paying out of their e-wallets, I feel like an anomaly, a technological Rip van Winkle, slow to catch up with the latest fads.

When I shop in a convenience store, young buyers queuing up in front of me invariably pay with their phones. When it is my turn, I literally lower my head in shame as I remove a fistful of coins from my pocket and lay them on the counter.

The benefits of cashless payment are no doubt myriad: shorter queues, less waiting time and occasional discounts.

As a matter of fact, I was perhaps introduced to mobile payment earlier than many. But it didn’t grow into a habit. My antiquated Android phone repeatedly kills my hope of being billed for a purchase within 30 seconds, which is the longest time I can tolerate for such transactions. Besides, the idea that one can go around without cash is still a bit outlandish for a diehard believer in cash and the sense of financial security it induces.

Stubborn as I am, lately I have joined the cashless revolution. Last weekend, I paid my parking fee using Wechat in a local shopping mall. I have to admit that it’s convenient because I avoided the usual long lines at the exit.

What’s more, for many retailers, they could be freed from the worries about receiving counterfeit notes if e-payment were the order of the day.

It so happens that “driving fake money out” is a slogan of the “cashless week” (August 1-8), a PR gimmick conceived by companies like Tencent, Alibaba and JD bent on promoting cashless payment and their services.

The impact of mobile payment doesn’t end here. In fact, it has implicated a few industries in unanticipated ways.

For example, the demand for point of sale equipment could plummet as the rate of card payment dwindles; banks could consider closing some unmanned outlets because people no longer withdraw money from an ATM that often; it was reported that some escort companies charged with delivering money to replenish ATMs are experiencing an average 10 percent annual decline in business thanks to the penetration of smart e-payment over the past few years.

The call of E-wallets

And what do we need real wallets for if they can be supplanted by virtual e-wallets that are much easier to use?

It will be interesting to see if sales of wallets — except those luxury brands that serve as status symbols — will drop in the coming few years. By the same token, it will be interesting to see how many trades or professions will be affected or even wiped out by mobile payment.

Of course, every type of new innovation has its critics. The main criticisms directed at mobile payment come from the very group least well-adapted to modern technology: senior citizens. Many are already complaining about being left behind and worse — being discriminated against by ubiquitous e-payment options.

For example, Alibaba’s Hema, a supermarket chain selling fresh merchandise, came under fire earlier this year for insisting on cashless payment. Many elderly shoppers were so annoyed that they lodged a complaint with the local consumer rights watchdog. Hema later apologized and rescinded its “cash-free” policy.

The lesson it has possibly learned is that while the race is on to enhance shopping experience to court young consumers, it is always necessary to leave a door open for people comfortable with traditional cash payment.

As a Guardian newspaper article points out in January, “If you begin to insist on cashlessness, it does put pressure on you to be banked and signed up to financial system, and many of the poorest are likely to remain outside of that system. So there is this real danger of exclusion.”

Proponents of technological progress must be wary of creating a new divide between different social groups, because we’ve already had enough of them.


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