China presents an attractive yet challenging market for many business professionals. GLOBIS MBA students went to the country's No. 1. business school, CEIBS, for a short exchange program. This is the first of three articles about what they learned.
China may be the world’s fastest-growing cashless society. The county is the world leader in mobile payment transactions--multiple times more than in the US. With more and more people becoming comfortable with technology and almost everyone using smartphones, the transition to a cashless society becomes easier and that much more inevitable.
In a cashless society, people do not use cash such as banknotes or coins for transactions & payments. Rather, they make electronic payments via mobile phones. All one needs to do is scan a QR code to transfer a particular amount of money to complete the transaction.
Needless to say, cashless societies have many benefits. First of all, it removes the hassle of carrying your wallet everywhere. People don’t carry physical cash and thus theft is reduced considerably. Even with a small amount of risk associated with mobile payments such as cyber attacks, daily theft and robbery are reduced considerably.
Corruption is also reduced as a country moves towards a cashless economy, as every transaction is tracked. Illegal cash-based transactions are put under check. Money laundering can be wiped out completely.
Cashless societies are quick & efficient. People don’t have to wait in lines for payments or to receive change after a transaction.
People also tend to spend more money overall. With cash, some people hesitate to spend, as they don’t have the right amount of change. Electric payments eliminate this problem.
In China, the two most common payment methods are Alipay and WeChat pay. These two apps are on almost everyone’s mobile phone. With the emergence of a middle class and the availability of many new affordable smartphones, using Alipay and WeChat pay has become a reality for almost everyone.
As these apps are connected to a person’s local bank account, all one has to do to make a transaction is to scan the recipient’s QR code or let the recipient scan yours. It is simple and fast. The money is transferred instantly, without any charge for the transactions. It’s incredible to see how even small street vendors use these payments methods. Even beggars use this technology… it’s unbelievable.
While cashless societies have the benefits mentioned above, the potential threats from cyber attacks will no doubt become more sophisticated. Only time will tell what kind of impact it will have on people’s everyday lives. I personally believe the advantages will outweigh its disadvantages, and a cashless society will spread to other parts of the world as well.
Photo from freerlaw