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August 15, 2017

How China Has Abandoned Cash

Just a few short years ago, cash was king in China.

Nowadays, ewallets like AliPay and WeChat reign. 

In the west, consumers are only just starting to get comfortable with using ewallets in brick and mortar shops, rather than just online. Meanwhile in China, a store clerk will ask if you want to pay with Alipay or WeChat, with cash being a third and almost redundant option. In 2016, the value of smartphone payments in China hit $5.5 trillion — compared to the $112 billion market in the U.S., according to IR Search. 

The street level experience in Chinese cities is entirely different to that of a western city: mobile payments are increasingly a baked-in part of the fabric of commerce. City workers order lunch and coffee to the office with their phones. If they need groceries, they can be delivered too. Using their ewallet apps, they can have dinner delivered to their apartments by the time they arrive home.Even buskers on the streets of Beijing and Shanghai put up boards with QR codes so that passersby can tip them without cash. Overall, trying to pay with cash in make your stick out like a sore thumb, and a nuisance to other customers queuing behind you to pay quickly with their mobile apps. 

Every business in China is plugged into the mobile payments ecosystem because it is essential for their survival. These payment apps are no longer just ewallets, but a lifestyle. In fact, WeChat is a complete lifestyle platform encompassing a social network with an easy way to pay.

Have Any Other Nations Abandoned Cash?

Although many western nations have started to forgo cash, these countries have very high card penetration. Card penetration in China is low, as they have bypassed cards and moved straight from cash to mobile payments. 

It has been predicted that Tencent (owners of WeChat) and Ant Financial (financial branch of Alibaba) could outperform card companies like Mastercard and Visa in terms of global transactions per day in the coming year. This is because they offer benefits to merchants such as economical and accessible QR-based payment options, rather than the costly upgrade to payment terminals in order to accept cards.

Are These E-Wallets Companies Used Elsewhere In The World?

They are indeed aware of the necessity to expand their services globally. Alipay in particular has been making serious headway with this goal, and now has high profile extensions in the likes of the Philippines, Thailand and India. To find out more about Alibaba’s investment in India, click here

Souheil Badran, President of Alipay North America, said on stage at the Innovation Project 2017 that Alipay are “always looking for where there is volume and where we can serve a lot of consumers. It is more than what’s next — it’s what have we done well in China that we can leverage well overseas. Lending, credit insurance, savings — all these things we are doing. We are a network in our own sense. So, now if I am a wallet user in the Philippines coming to the U.S., I have a way to pay,”

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