Read the first part of “China Has Gone Cashless, Is The U.S. Next?“
Experienced users like the fact that they can track spending, transfer funds, and its wealth management functions with Alipay. Tencent went further by building platforms for businesses, where their customers can be alerted to discounts and promotions.
Beyond established successes, these companies can paint a clear picture of consumer behavior, particularly in China, where credit cards never really caught on. The financial tech companies have disrupted the traditional banking industry.
With that said, there has been repercussion to the increase in mobile payments, which aren’t required to go through the nation’s central bank’s system. The circumvention makes a challenge for Chinese monetary authorities to monitor laundering, fraud, and capital flows. In response, the Bank of China has requested the development of a payment-clearing platform for non-bank entities to utilize.
China saw $9 trillion in mobile payments in 2016, which effortlessly overshadows the $112 billion in mobile spending observed by the U.S. The U.S. is intent on making strides toward a cashless society by increasing digital-wallet efforts. PayPal has formed partnerships with nearly two dozen companies, and Alphabet Inc.’s Google has seen successes, and Apple Pay service is gaining traction, though very few iPhone users use the service.
China and India have firsthand encountered the possible drawbacks of cashless-ness, including fraud, processing fees, and confusion for older users, as well as fact that it may exclude the poor and near-poor. However, with the mounting success of Stash, Venmo, Square Cash, and Bitcoin, and there are e-banking solutions that will be accessible by the unbanked, undocumented, and those who don’t necessarily meet the balance minimum to open or maintain a checking or savings account.