Daily Management Review

Cash Is Rapidly Becoming Obsolete In Urban China


07/18/2017




Cash Is Rapidly Becoming Obsolete In Urban China
In China, an audacious economic phenomenon is taking place.
 
How China is systematically and rapidly doing away with paper money and coins  is the issue rather than debt, infrastructure spending or the other major economic topics du jour. It has to do with cash.
 
A smartphone to pay for just about everything is being used by almost everyone in major Chinese cities. Before bringing up cash as a third, remote possibility, a waiter will ask if you want to use WeChat or Alipay — the two smartphone payment options, at restaurants.
 
How quickly the transition has happened is just as startling. Simply because everyone was still using cash, there would be no question at all only three years ago.
 
"From a tech standpoint, this is probably one of the single most important innovations that has happened first in China, and at the moment it's only in China," said Richard Lim, managing director of venture capital firm GSR Ventures.
 
One has to see to believe certain parts of the Chinese internet. Until you are forced to do without them, it's hard to comprehend that Facebook or Google can be completely blocked, coming from outside the country. until the sixth person of the day asks to scan your QR code — a sort of bar code — to connect the two of you, it's tough to fathom how critical the messenger app WeChat is for everyday life.
 
"It has become the default way of life now," said Shiv Putcha, an analyst with the research firm IDC. "Literally every business and brand in China is plugged into this ecosystem."
 
Some Scandinavian countries still use cards frequently even though they have also weaned themselves from cash. The change has been to phones in China.
 
This means that sitting atop a gold mine of staggering proportions are Tencent and Alibaba's financial affiliate, Ant Financial, the two Chinese internet companies that run WeChat and Alipay, respectively. Both companies can collect the payments data to be used in everything from new credit systems to advertising while they can make money off the transactions and charge other companies to use their payment platforms.
 
In the coming year, set to surpass credit card companies like Visa and Mastercard in total global transactions per day are Ant Financial and Tencent according to recent data, Mr. Lim said. Instead of an expensive card reader, partly by allowing smaller vendors to make use of a simple printout of a QR code or their phone, the key is that both companies are able to provide payments on the cheap. Instead of having to communicate with a bank, a back-end system that stores a record of user accounts also helps keep costs down.
 
Driven largely by mobile payments, the "other services" item in its earnings almost tripled from a year earlier to 6.4 billion renminbi, or $940 million in the fourth quarter, for Tencent, even while the company does not break out what it makes from mobile payments.
 
But with China's sweeping embrace of online payments, there are some potential future problems. It is slowly locking out people unable to get onto those networks, and locking itself into those companies as the country builds its entire consumer economy around two private smartphone payment platforms.
 
For tourists and business travelers, they will find it hard to turn their phones into wallets as they are unlikely to open a bank account in China and that makes their life difficult in China.
 
(Source:www.cnbc.com) 






Science & Technology

Fast Company: Apple isn't the most innovative anymore

U.S. Space Program Could Be Delayed Due To SpaceX, Boeing Design Risks: Reuters

What trends will be affecting the health sector in the coming years?

Deloitte identifies main cyber threats for power industry

Zenuity To Take Self Driving Car Road Test In Sweden With Permission

Researchers: Half of Facebook users is fake

Amazon’s Ring gets in a privacy scandal

Facebook Is Creating A Stablecoin For Its WhatsApp Users

IBM offers to use the first quantum computer

Passport Numbers Of 5 Million Customers Hacked: Concedes Marriott

World Politics

World & Politics

AirHelp expects up to 33 th of cancellations and flight delays per day all over the world in 2019

Far-right and Catalonia: New elections in Spain

Trump is losing rating because of shutdown

Hanoi, Vietnam Chosen As Place For 2nd Summit Between Trump And Kim Jong-Un

US, China to hold new negotiations in Beijing

Human Rights Not To Be Dissociated From Stability, Macron Tells Sisi

Brexit Hijack Is Not The Parliament’s Right

Macedonia ignites political crisis in Greece