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China: Central Bank Calls for Broader Cash Acceptance as Antitrust Regulators fine Fintechs

Categories : Cash has legal tender status
December 15, 2020
Tags : Acceptance of cash, China, Legal tender, Mobile Payments
The People’s Bank of China tells merchants to accept cash or face sanctions in the wake of a widening digital divide. The rapid transition to digital payments is leaving some behind and creating “gaps of digitalization”.
Guillaume Lepecq

Chair, CashEssentials

This post is also available in: Spanish

Regulators are Increasing their Scrutiny of Bigtech and Fintech

Alipay and WeChat Pay account for the majority of mobile payments transactions in China. Alipay’s share of mobile payments has increased, rising to 55.1% in the fourth quarter of 2019, according to research consultant iResearch. Tencent had 38.9% of the market. In November, the parent company, of Alipay, the Ant Group was set to raise $37 billion in what would have been the world’s largest IPO before it was halted by the Chinese authorities. The Chinese antitrust agency has been investigating  Alipay and WeChat Pay on suspicions of breaching anti-trust rules according to Reuters.

Bloomberg reported on 14 December that the Chinese antitrust authorities fined Alibaba Group  and  Tencent Holdings  over past acquisitions, signaling  the regulator’s intention to tighten oversight of internet sector deals. The penalties follow declarations from the regulators, announcing the increased scrutiny of China’s largest tech corporations with new anti-monopoly rules. Beijing in November unveiled draft regulations that establish a framework for curbing anti-competitive behavior such as colluding on sharing sensitive consumer data, alliances that squeeze out smaller rivals and subsidizing services at below cost to eliminate competitors. Shares in Alibaba and Tencent extended losses and closed down more than 2.5%.

Discrimination against Cash creates “Gaps of Digitalisation”

Meanwhile, Reuters reports that the central bank  has called for wider acceptance of cash in economic activities and vowed to punish those who refuse to accept cash payments in the wake of a widening gap in access to digital services

Some merchants and institutions have been increasingly refusing cash – in spite of its mandatory acceptance in China – due to reasons such as cost control or user experience, with the trend accelerated by the COVID-19 pandemic.  The People’s Bank of China (PBOC) said in a statement: “Cash is the most basic means of payment. Entities or individuals cannot refuse to accept it,” adding that the central bank will investigate and punish firms or individuals that refuse to accept cash or adopt discriminatory measures against cash payments.

The PBOC urged that all entities and individuals should not discriminate or carry out any inconvenient measures to exclude cash payment and create “gaps of digitalisation”.

“Non-bank payment institutions must not promote the concept of cashless or discriminatory means of cash payment in any forms,” it said.

This post is also available in: Spanish