China Has Ditched Cash For Digital Payments

Over the past few decades, China has transformed itself into one of the most technologically advanced nations in the world, and one of the shifts we’ve seen in the Middle Kingdom is its shift away from cash and towards digital payments. If you talk to someone who lives in China, you may be surprised to learn how little cash is actually used there today. On the other hand, mobile payments have become the norm, with trillions of dollars in these mobile payments being spent each year. There’s hardly anywhere that doesn’t accept digital payments, from large grocery stores to small restaurants and tea houses to tiny vendors at the water markets. At this point, it is pretty uncommon to see paper cash, especially if you are in one of the bigger metro areas in China. According to the owner of a popular noodle restaurant that comes between Shanghai on Lancun, the widespread digital payments, as well as online sales for delivery, have become a driver of growth for small businesses. He explained, "You do not need more money to run the restaurant. It's a changing business world because mobile phones are starting to dominate people's lives. It's a typical disruptive technology. It forces us to learn how we can best leverage applications to grow our business. We thought it was worth trying when the payment service providers approached us.  The rapid increase in mobile payments in small restaurants like ours is a surprise.” 

,Back in 2015 he ran a cash business, but he has since received around 70% of his payments, which comes to around $1,500 a day, through Alipay, WeChat Pay, and other electronic payment services. He elaborated that “Applications have collected a lot of data through payments and they know exactly who our customers are and what they want. I am ready to work closely with them in the future if they offer other paid services to promote the store." His restaurant is in the competitive fast food market which requires him to keep prices, and therefore costs, as low as possible, and he still has to deal with high rents. With 20 tables that seat roughly 50 people at once, he runs a volume business, and anything to speed up and simplify the process of serving customers will be good for his business. His restaurant was among the first of its type to start digital payments, and it has since gone on to benefit many other small restaurants and other businesses which in the past have not been able to offer credit card payments. Interestingly, these digital payments show that big and small companies can mutually benefit each other, as the payments are being made through the platforms from companies such as Alibaba with Alipay and Tencent with Tenpay via WeChat, and those two companies make up for a bulk of digital payments. In 2018 it was estimated that 42% of the world’s e-commerce was from China, and their online payments just keep increasing as time goes on.