Cashless Payment in China: Advantages and Disadvantages

Introduction

There are a few kinds of payment methods that people staying China uses, cashless payment or by cash. Examples of cashless payment are Alipay, Tenpay and WeChat Pay which use mobile phone devices to make payment by scanning the QR (Quick Response) Code. Researches have shown that 75% of the China citizen are more likely to go cashless payment. Why?

It is because of in China, there is a high level of counterfeit money in China and a high level of pickpocketing. There have been many incidents like my friend have counterfeit and a few of my friend got pickpocket. From a survey made by PayPal, 90% of Singaporeans say they prefer to use cash as their primary mode of payment, with only small percentage using digital payments regularly. However, when it came to using cash regularly, 43% of the 90% cited problems such as having insufficient cash on hand, and long queues at the automated teller machines (ATM).

The same study found out that Singaporeans are actually more aware of the various digital payment platforms than their Asian peers, but are slower to embrace these new technologies, some are due to the confusion over the large options of e-payments. Quoted from Prime minister Lee Hsien Loong: “In Singapore, we too have e-payments, but we have too man different schemes and systems that do not talk to one another.

So people have to carry multiple cards, and businesses have to install multiple readers. It is inconvenient for consumers, it is costly for businesses. And the result is, most of us still prefer cash and cheques – 5 in 10 transactions are cash and cheques”. Therefore, I can conclude that Singaporeans still rely on cash more often.

On the other hand, in the same research survey, only 25% of the locals preferred using cash as their primary mode of payment. 75% of them all preferred cashless payments instead. The main reason for this was because of the inconvenience felt by many using traditional banks, they have to travel long distances for rural customers to having queue in the branches in the cities which require a lot of their time being spent on just drawing out money from their bank account.

Advantages and Disadvantages

Advantages of cashless payment (QR Code)

1. It reduces the chances to make counterfeits.
2. It will help in tracking the black money. Same benefit will be received by doing cashless transactions. It will result in more transparency in the system.
3. One can pay the exact amount to the shopkeepers without worrying about the change.
4. Low management of cash such as the claw machine I went to due to the excitement that cover the fact that we catch a few after spending over few hundreds of yuan.
5. No credit card fee needed to be paid.

Disadvantage of cashless payment

1. Hacking – Hackers are known to be a skilled computer expert that uses their technical knowledge to robs banks from the cashless transactions that is being made. This can be very dangerous as there is large target audience in China.
2. Technological issues – Such as glitches, outages or some mistake that you make that can or probably lead to a huge issue which leave you without any ability to purchase items whenever you need it. On the other hand, the merchants cannot not have any way of accepting the payment from the client when the system is not able to be operated. Even the most basic issues such as phone battery life which is dead might leave you without a way to make your payment but to turn to option one, cash, which maybe be an inconvenience if you go out cashless.
3. Overspending – going cashless for payments mean paying without using cash. When paying with cash, people tend to be very cautious and have the concept of spending and saving of money at the same time as they can keep track of the cash visually. However, going cashless payment allow the quick payment of cash which means a lot easier to pay. Lots of people will rather choose the simple way.
4. Out without even looking at what is being paid and just scan the QR code.
5. Personal experience with cashless payment in China.

Personal experience

In China, there is only one application I used which I was informed beforehand, WeChat. When my group of friends went to SanLiTun where there is a lot of real shopping products and good food, we were checking out the place. Nigel and I discover a claw machine shop nearby call LLJ Claw Machine shop. That shop has good reviews so we decided to look up on it. When we got there, outside there is few people who have a chain of very cute plushies.

We decided to spend our afternoon and we went into the shop. One thing I realized that is the shop is very organized despite the huge crowd of people. There is one person to guard one proportion of the area. The next time I observed is that everyone is using WeChat to pay the machine unlike Singapore arcade which still uses tokens.

The next thing that hits me that worried our group is that some people have WeChat but we Singaporean students do not have a China bank account to transfer money to convert into the tokens. We went to ask the lady who is at the counter which is in charge of the administration. Luck was on our side, there is a way to top up the token (money for the game) in the phone which is to buy a 100-yuan card and manually top up the money on the phone.

How does the claw machine work? The player has to produce a QR code from their mobile phone, there is a scanner that scan the QR code and deduct the specify amount of token from the player account which makes a lot of thing easier, lessen the amount of workload and focus more on the security as compared to Singapore.

In Singapore, there is lot of problems in arcade like having machine malfunction, token get taken in but not allowing the player to play or the machine needs to clear out all the token in order for the next player to play but in China, there is no such problems faced as they used the QR code. From my experience, I realized the reason why most prefer the cashless payment as there is many advantages like it is quick and easy, no worries such as having not enough money to make the payment or no cash.