If you’re planning on visiting the cashless society of China anytime soon, you better make sure all of your physical currency is left behind. Wallets in most of the country have gone digital, and the rapid growth of digital payments and currency is exploding at a rapid pace.
The country 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 $12.8 trillion in 2017.
When it comes to the ever-evolving FinTech and mobile payments industries, the rest of the world can look to China for adopting strategies that will help move economies of other countries towards a cashless society.
China’s Cashless Society Journey
Much of China’s growth is attributed not just to their rapid urbanization, but ultimately the government’s push to replace cash with electronic payments. Because of this and other factors, the country is much further ahead than the United States when it comes to mobile wallets and digital currency.
One big example of this? QR codes. Where QR codes have failed to gain popularity in the U.S., they are used all throughout China to purchase goods and send money between persons. Their speed and ease of use are widely accepted and appreciated by merchants and consumers alike.
Throughout the country, 40 percent of the population carries “almost no cash”, which is just another nod towards the popularization of mobile payments. In addition to seemingly becoming a cashless society, China also appears to be becoming a cardless society.
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.
Why Haven’t Other Countries Gone Cashless?
Despite China’s great success with going cashless for payments, and the rest of the worldwide population having access to various electronic payment choices, 85 percent of all consumer transactions throughout the world are still done in cash.
According to a MasterCard analysis, there are four factors that determine why certain countries are ready to move towards a cashless society: Access to financial services, macro-economic and cultural factors, merchant scale and competition, and technology and infrastructure.
From a global perspective, in countries where a cashless future is nowhere near a reality, factors like culture and a lack of payment options and electronic payment ecosystems all contribute to the lag in going cashless.
Take India as an example, where a cashless society would have a significant negative effect on the working poor, who rely almost exclusively on cash. Most of their retail transactions, approximately 97 percent, are done in either cash or check.
Is There a Future for Non-Cashless Societies?
Compared to most traditional payment methods, digital and mobile payment options like Apple Pay, Venmo, Zelle or Paypal are generally faster and more secure.
And with more consumers moving towards digital wallets, it’s clear the way they choose to pay has changed drastically in the last decade. Each step the FinTech and payments industry takes forward, the further away societies around the world get from cash as a main currency.
Cash and its role in global economies is shrinking, largely thanks to advancements and evolution in the financial industry and in payment and currency technologies.
However, as discussed earlier, cash still plays an important role in several countries — even in the U.S. It is still valued, especially for its convenience in P2P transfers and small-value transactions.
While cash still has a place in economies around the world, it is ultimately declining, especially given the rapid rise and growth of digital currency and payment technology and its accessibility.
With the fast paced evolution of the financial industry, it is no surprise that many societies throughout the world are experiencing major advancements and changes in the FinTech landscape. Big data, blockchain, artificial intelligence and mobile payment technologies are transforming the way businesses sell and how consumers pay for goods and services.
More and more, countries are becoming digitally evolved and finding ways to include its entire population digitally. All of this has been in an effort to move towards digital alternatives to cash to improve and secure their economies.
Companies in various industries, not just those in FinTech, would be wise to find value in running full speed ahead towards investing in technologies related to mobile payments, digital currencies and Industry 4.0.
Future-proof your business and stay at the forefront, by learning from top innovators and thought leaders in mobile payment technology, digital currency and the impact of cashless societies. Attend this year’s Mobile Payments Conference to learn more about how the world of mobile technologies are evolving. Get your Mobile Payments Conference 2018 tickets today.