Developed markets have been quick to embrace contactless payment, while China's favourite method – via QR code – is fast spreading abroad. So is this the death knell for cash?
The use of quick response (QR) codes for payments has seen a meteoric rise in Asia, to the point where people feel ‘old-fashioned’ when trying to use banknotes in Chinese cities such as Shanghai and Beijing. Consumers have been won over by the slick user experience of simply scanning and paying, while the low-tech, low-cost deployment has pulled millions of small and micro merchants into the payment system, happy that they no longer need expensive point-of-sale terminals to accept digital payments.
While QR codes have not made the same inroads in developed markets such as Europe and the US, Chinese visitors to European and US tourist destinations are beginning to fuel adoption in these regions, as e-commerce giants such as Alipay and WeChat Pay partner with local banks and merchants to provide the same payment experience they receive at home.
In developed markets, the global march towards digital payments also continues apace. Near-field communication (NFC) mobile or contactless card payments are continuing to push cash out of the payment equation. In the UK, for example, the number of debit card payments overtook cash for the first time in 2017, according to trade association UK Finance.
These advances have seemingly put the vision of a cashless economy tantalisingly within reach. But with every new payment type, the older methods persist. And while physical cash is costly to print and distribute, inefficient and less secure than its digital alternative, it is also anonymous, free to use and readily accessible for everyone. And it acts as a safety net if – or when – the big electronic payment systems fail. Therefore, while cash is becoming progressively less important in day-to-day usage, society as a whole is not yet ready to abandon it altogether.
