It's Becoming Harder to Use Cash in China
It's Becoming Harder to Use Cash in China
(Bloomberg) -- Hi folks, it's Shelly Banjo. Sometimes you don't really grasp the ubiquity of something until you're shut out.
I spent last week in Beijing, where Tencent's WeChat has become inescapable for the roughly 900 million daily users (out of a national population of 1.4 billion) who use the app to do everything from chat with friends to hail a taxi or pay rent.
Even beggars in China reportedly accept handouts via WeChat, using QR codes linked to payment accounts. (Some have cautioned that this phenomenon might be more of a marketing effort, or an attempt to gather IDs).
However, as a foreigner without a bank account or phone number from mainland China, once I landed in Beijing I was locked out of WeChat's pay function. Ditto for Alibaba's Alipay, the other big pay app with about 520 million users. I could use both services in Hong Kong, but not in Beijing. In order to do so, I would need a Chinese bank account, due to know-your-customer and anti-money laundering rules. Still, I completely underestimated how difficult this would make daily life.
Take grabbing a taxi to a meeting. Now that ride-hailing app and Uber-killer Didi Chuxing has conditioned drivers to depend on it for passengers, it's increasingly difficult to hail a cab on the street. Private cars accept only mobile payments. It's possible to use the Didi app to summon a traditional city taxi that accepts cash but the drivers I encountered rarely carried enough to make change.
Foreign credit cards aren't accepted at most restaurants or convenience stores. So when I tried to use cash to pay for meals or odds and ends at 7-Eleven, waiters and shopkeepers were either confused or bemused. Patients can now book hospital appointments using WeChat, letting them avoid wait times that can last hours.
There are more smartphone users in China than any other country in the world. Penetration stood around 52 percent in China last year, compared with 69 percent in the U.S., U.K. and Germany, according to gaming consultancy Newzoo. But almost all those who access the internet in China do so using smartphones, while Beijing, Shanghai and other big cities have an 80 percent penetration rate, according to China Internet Watch.
Alibaba, Tencent and other web businesses already have a pretty good picture of where people are and what they're buying at any given moment. The stakes are about to get even higher as China moves to digitize everything from subway and train tickets to national identity cards used for opening bank accounts or accessing social welfare programs.
At some point, being locked out of China's digital economy will make it difficult, rather than just annoying, to get anything done. Based on my week in China, it's clear that a sort of forced digitization will happen in more places. The question is, will we be be using Alipay and Wechat, or will some other payment system (Apple Pay or Android-based) become dominant?
This article also ran in Bloomberg Technology’s Fully Charged newsletter. Sign up here.
And here’s what you need to know in global technology news
Apple is going to revamp software development. The iPhone maker is shaking up its development program to focus more on key features and push back others…
... while Google plans its own overhaul of Android. New features may include: mimicking Apple's controversial new "notch" at the top of the iPhone X, tighter integration with Google’s digital assistant, improved battery life and support for new designs, such as multiple screens and foldable displays.
A hack was taking place just as the opening ceremony of the Pyeongchang Winter Olympics got under way. Attacks caused both LAN and WiFi communications to fail during and prevented tickets from being printed from the Olympics website, in what appeared to be a bid to embarrass the organizers.
Amazon is cutting jobs. Hundreds of positions at its Seattle headquarters will go as the web retailer pares back older departments focused on selling goods online, while hiring in newer lines of business such as cloud computing and its Alexa platform.
Want to know what Amazon and semiconductor makers are up to? You might want to check out what Daifuku, a Japanese maker of baggage systems and machines that move stuff around, is up to.
Tencent last month said WeChat would start accepting foreign credit cards. Hours of trying with local colleagues failed; It turns out, users may be able to link foreign credit cards,but to qualify for WeChat pay in the first place they need to verify their identities with a mainland bank account or national ID.
To contact the author of this story: Shelly Banjo in Hong Kong at sbanjo@bloomberg.net.
To contact the editor responsible for this story: Reed Stevenson at rstevenson15@bloomberg.net.
©2018 Bloomberg L.P.