You may recall in our previous article how a cashless economy discriminates against the poor to the point that government officials and consumer advocates are now taking a stand. In November of last year, Ritchie J. Torres, a councilman from the Bronx, introduced a bill that would forbid certain businesses in New York from refusing to accept cash.
In the latest move to fight the war on cash, China’s Central Bank has taken action against merchants refusing to accept cash payments — a sign that cash may be winning. Despite mobile payments being popular in China, over 600 merchants have been ordered to stop rejecting cash, including Alibaba’s Hema supermarket. Consumers complained that Alibaba was doing opposite from its reputed “seamless blend of online and offline shopping experience” to which the bank immediately responded to.
So far, the People’s Bank of China (PBoC) identified 602 cases of cash refusal, of which 558 have been resolved, reports Asia’s FinNews. These moves have been made to ensure that no payment provider, particularly Ant Financial’s AliPay and Tencent’s WeChat (China’s most powerful third-party payment platforms with around 980M and 600M users respectively), will dominate the market scene.
To put greater constraints on the country’s largest payment providers and to avoid earnings from their own deposits, PBoC now requires all third-party payment providers in China to hold 100% cash deposits in non-interest-bearing accounts at the central bank. Still, the war continues with other governments discouraging the use of cash. The Reserve Bank of India established rules and incentives for merchants and consumers to move onto digital payments.
“There will always be the need for a completely fungible, universally accepted form of value transfer — and that’s cash”, says Thad Peterson, Senior Analyst with Boston-based Aite Group — and we could not agree more.
In the context of financial inclusion, cashless payments are only doing more harm than good. With China’s ban against financial discrimination, chances are high that cash is taking over and winning the marketplace.