Towards a cashless world
China is leading the way in the global trend towards digital payments, with 14 percent of its people already leaving the house without a wallet. Europe is following hot on China’s heels. Whether it is via a mobile phone, smart watch or internet platform, users are looking for faster, more secure and more convenient transactions. Are we facing the end of cash money?
Every morning Yang Wen leaves his house in Chengdu (in the south-west of China) with his bag, a jacket of some sort, but no money. On his way to Trías, the videogame company where he works as assistant to the Managing Director, he buys his breakfast.
How? He uses his mobile phone: "I use it all the time in supermarkets, greengrocer stalls, to have a sandwich or a coffee; even when what I am buying only costs one yuan (€0.13)". Wen, 29, is just one example of the 14 per cent of Chinese who live without a wallet, according to the 2017 Mobile Payment Usage in China Report by Tencent and Ipsos. It is an upward trend, according to the study’s findings.
But there is no need to go so far to observe that there is an increasing number of people who leave their wallets at home: 86% of Europeans between 18 and 34 are aficionados of digital money, and nine out of ten claim that they will move over to this model within the next three years, according to the latest Annual Study on Digital Payments 2017, which was carried out by VISA.
On the whole, millennials go for their mobile devices as the tool to manage their finances, buy things online and make day-to-day payments, such as parking or social outings.
Sweden, together with Denmark, Norway and Finland, lead the rankings of the countries where cash is least used: barely 1% of payments are made with coins or notes. Behind this fact is a clear commitment by their governments to pursue greater control over transactions to minimise money laundering and tax evasion.
The apparent path towards a cashless future is linked to the boom in technological solutions and the growth of the fintech sector, as financial industries that opt for technology to improve financial activities are known. Banks, credit card companies, multinationals and technological start-ups have got on board and are offering various innovative options. The aim is to make payments as fast, simple and secure as possible.
According to this report, the main guilty parties for the fact that one in two Chinese people use cash for 20% of their monthly expenses are two payment apps: Alipay, which belongs to the all-powerful Alibaba, and WeChat Pay. "It’s fast and convenient because you only have to scan the establishment’s QR code with your phone; you accept the purchase and you go", explains Wen. Although these two-dimensional bar codes – and mobile phones themselves – will soon be obsolete because Alipay is already successfully testing payment by facial recognition, which has been christened with the evocative slogan 'Smile to Pay'.
Places to buy without money
China seems to have put itself forward as the global leader in cashless initiatives, and further proof of this are BingoBox portable supermarkets. These are a kind of gigantic vending machine, in which you can have the experience of going shopping without credit cards or notes, as well as of not being attended by anybody.
At present, their success has been such that there are already 300 around the country’s big cities. This same philosophy has been applied to Amazon Go, the first food store by the multinational Amazon, which has opened its doors in Seattle (USA): you register with your mobile, take what you need and go. No queues, no tills, no cash payments.
Wearables beyond mobile phones
Physical devices that carry out transactions by simply putting them near the payment terminal, like mobile phones and other wearable gadgets, are already a reality. These include watches developed by Swatch, designer waterproof rings, and silicone wristbands that various companies already offer. Even VISA has developed some prototype sunglasses that have an integral chip linked to a bank card.
Digital wallets and buying online
Other kinds of technology that are already well-established in companies like Amazon, Google Play and I-tunes are Card on File systems, in which the websites store a user’s payment details so that you can make purchases with a single click. PayPal and Iupay and their digital wallets are also very popular, and they are like having a virtual wallet any time you have a computer, tablet or smartphone to hand.
Another tsunami that seems to be shortening the days of physical money is the bursting onto the scene of cryptocurrencies, with Bitcoin heading the charge. Created by the mysterious Satoshi Nakamoto in 2009, it is nothing more (or less) than a computer file that, once purchased on the web, is kept on your electronic device. Of all the virtual offerings, this is the one that most resembles having notes, but in the digital world.
This is the case because each unit has a unique number, and there is a decentralised accounting book that registers all exchanges and ensures that a unit of money cannot be used twice. Despite the recent fall in its value, bitcoins went from costing $750 (€612) per unit at the end of 2016, to over $15,000 (more than €12,000) in December 2017. Its possible impact on a hypothetical disappearance of cash is something that, like its creator, is not known.
Speed, security, ease of use, combatting tax fraud. There are many advantages offered by new technologies for leaving cash behind us, but at the end of the day it will be the user, and their relationship with digital technologies, that decides on the end of paper and metal.
By Elvira del Pozo