Mobile Payments Are Making Cash Obsolete In China

With mobile payments in China booming, cash is going away — despite efforts by the Central Bank to go after merchants who won’t accept cash.

The Financial Times reported that the booming digital payments market in China is also happening despite efforts on the part of the Central Bank to also stop Ant Financial and Tencent from being the dominant players in the digital retail payment market.

Citing figures from research firm iResearch, The Financial Times reported mobile payments in China hit $17 trillion in 2017, with Alibaba’s Ant Financial affiliate and Tencent’s WeChat Pay emerging as the leaders in the country. The paper noted that last year the People’s Bank of China found 602 instances in which merchants refused to accept cash. Of the cases, the paper noted that 558 have been resolved via policy communications and so-called criticism-based education. The Financial Times cited information from the official Shanghai Securities News as well as a spokesperson from the central bank in China.

“In recent years, there have been problems with the circulation of renminbi cash, and the people’s response has been intense,” the PBoC said in an accompanying statement back in July when it issued a formal notice about how refusing cash is illegal. “Consumers at tourist areas, restaurants, and retail merchants have had their cash refused, which has damaged the renminbi’s legal status and consumers’ right to choose between payment methods.”

As for China’s efforts to slow down growth at Ant and Tencent, the paper noted that as of January, all third-party payment companies have to hold 100 percent of clients’ cash deposits in non-interest bearing accounts — which will take as much as $1 billion in interest income away from the likes of Ant and Tencent. The central banks also refused to give licenses to two companies that want to launch credit rating companies. The central bank worried the scores could be used to get people to purchase other products.