China Fosters a More Inclusive Payments Landscape with Cash

Jun 5, 2024


Recent policy developments in China recognise the importance of cash to inclusivity—for residents and tourists alike—and aim to improve the acceptance of physical money alongside digital options.

The Guardian reports that, over the past two decades, China has fostered an environment of app-based payments that has led to the current dominance of Alipay and WeChat pay, and a rising number of cashless businesses.

One major drawback of this is a lack of personal privacy, with every app-based transaction not only monetised to the benefit of fintech companies, but also tracked and viewable by authorities. While this may be seen as advantageous by the government, the exclusion of citizens who are unwilling or unable to engage with digital payments, the struggle of tourists to make payments when apps require Chinese bank accounts, and the risk of local economies collapsing in disaster scenarios when the infrastructure supporting cashless transactions fails are all driving a strategic re-evaluation.

China is one of the top countries for using cashless payment systems, but penetration is not 100 percent. Elderly Chinese still often prefer to pay with cash and some struggle with using mobile payments.
"Sara Hsu, Associate Professor Specialising in Supply Chain Management, University of Tennessee

In late 2020, the People’s Bank of China introduced fines for organisations refusing to accept cash, describing such measures as ‘discriminatory or inconvenient’. In April 2024, it added a notice requiring local commerce authorities to ensure retailers and hospitality venues accept cash in order to ‘optimise the cash usage environment’ and ‘accommodate diverse payment acceptance.’ Also in April, a new taxi fleet entered operation in Shanghai with the directive for drivers to carry cash so they are able to give change.

The situation has improved to some extent, but this [recent] directive pushes China’s policy of inclusive finance further to ensure that both elderly Chinese and foreigners can participate in economic transactions.
"Sara Hsu, Associate Professor Specialising in Supply Chain Management, University of Tennessee
Last Updated: Jun 5, 2024