Local authorities in China are worried about the exponential growth that digital payments are experiencing in the country. In a recent report released by the FT, the People’s Bank of China (PBoC) is very concerned about the declining relevance of cash for processing payments in the Asian country.
According to this report, there are several shops and stores that are currently relying solely on digital payments rather than cash. There are some payment applications such as Alipay and WeChat Pay that are making payments much faster and easier to be performed using digital systems.
The issue started to generate some concerns when banks experienced complications to facilitate the flow of cash in the economy. This is why the PBoC decided to remind merchants that they were not able to refuse the Yuan.
On the matter, the PBoC commented:
“In recent years, there have been problems with the circulation of renminbi cash, and the people’s response has been intense. Consumers at tourist areas, restaurants, and retail merchants have had their cash refused, which has damaged the renminbi’s legal status and consumers’ right to choose between payment methods.”
Back in 2017, there were some reports that showed that in some areas, digital payments accounted for more than 90 per cent of the sales. In many circumstances, cash can be more difficult and expensive to handle than electronic transactions.
Using more digital payments means that the government has a larger control over its population. With cash, payments cannot be traced and can be performed in a completely anonymous way. With this increase in digital payments in one of the most powerful countries in the world, cryptocurrencies and Bitcoin could gain their place in a highly digitalized market.
Banks and other traditional financial companies are not being able to capture the attention of younger users such as Millennials. There are several companies in the crypto space that are working in order to offer merchants the possibility to accept payments in virtual currencies and receive the funds in their local currency.
However, if virtual currencies want to spread in China the government would have to amend or change current regulations that banned cryptocurrencies.