
China Can’t Afford a Cashless Society - methou
https://foreignpolicy.com/2018/09/11/china-cant-afford-a-cashless-society/
======
EZ-E
> When apps are built on the assumption that residents of a specific community
> are formally enrolled in a bank or financial institution, the unenrolled are
> simply locked out of being able to pay

Ironically I recently realized tourists visiting China might be victim of this
too. If you're coming to China you won't be able to do much until you open a
bank account and get a local phone number.

More and more restaurants or stores only accept mobile payment using
wechat/alipay but short term visitors won't be able to open a bank account
(even if you try these days, many banks will refuse you if you have a tourist
visa). Visitors also won't be able to get a subway card on their phones, can't
rent shared bikes, and won't be able to order a taxi using the local "uber"
because all of these require a local bank account too. Even my local coffee
shop only accept payment through their app with gives you a QR code to get
your coffee, no cash.

Even more ironic, if you do go through the trouble, open a Chinese bank
account and use the local payement apps (WeChat/Alipay), you won't be able to
use it back in your country - even if the stores in the airport accept Alipay
for example, only users with a Chinese ID can use it outside of China.

~~~
AznHisoka
“until you open a bank account and get a local phone number.”

You won’t be able to get a SIM card either unless you are a Chinese citizen(or
have a citizen get one for you)

~~~
arnvald
I got one using foreign passport. However in the first shop I tried I was told
I need Chinese ID. In the 2nd shop there were no problems

~~~
AznHisoka
Yep, It appears that I'm not 100% accurate.

Some China Mobile/Telecom chains, in general, will _refuse_ to sell SIM cards
to foreigners, even if you got a passport. China Unicom, however will sell
them to you, if you got a passport. So the responses here are also not 100%
accurate, if I'm being fair :)

~~~
giardini
You were pretty accurate!

Have a group of friends touring China right now. They tried for days to get a
SIM card but finally gave up - nobody would sell one to them!

The only place they did not try was a vendor at the airport where they
arrived. They judged that vendor would be overpriced so waited until they got
into the city.

~~~
AznHisoka
Yep. I feel the people who responded don't know the _latest_ rules happening
in China. Even a few months ago, it was pretty easy to get a SIM card in
China. But they have tightened things up a bit.

------
larrysalibra
I agree with the directional sentiment of the article that a cashless society
is bad for the poor and for other disenfranchised members of society.

I don't see the "many places will not accept cash" problem that the article
suggests is widespread.

I'm in Shenzhen once or twice a month and haven't had any problem paying with
cash - taxi drivers and vendors don't complain.

Vendors being unable to give change for 100 CNY bills was a frequent problem
10 years ago and is still periodically a problem. More often than not the
solution is still the same as it was 10 years ago: insist that this is all you
have. Half of the time the vendor really does have change and just didn't want
to give it to you. The other half of the time the vendor really didn't have
change and will ask a neighboring shop for change.

------
DINKDINK
Related reading: "If plastic replaces cash, much that is good will be lost –
Brett Scott | Aeon Essays"

[https://aeon.co/essays/if-plastic-replaces-cash-much-that-
is...](https://aeon.co/essays/if-plastic-replaces-cash-much-that-is-good-will-
be-lost)

~~~
dis-sys
it is so funny that the author just jumped off an international flight with
his complained jetlag, yet he choose to praise cash when he couldn't buy coke
from a vending machine using his foreign credit card. he further mentions that
"Cash transactions are peer-to-peer, requiring no intermediary, and are thus
transactions that Visa cannot skim a cut off", I really want to know how to
buy a can of coke in Netherlands using Chinese Yuan/USD/Japanese Yen in cash
in such a "no intermediary" no "cut off" fashion.

~~~
DINKDINK
>I really want to know how to buy a can of coke in Netherlands using Chinese
Yuan/USD/Japanese Yen in cash in such a "no intermediary" no "cut off"
fashion.

It's almost like we would need a digital, global, censorship resistant
currency

~~~
mmt
One that actually works, with sufficient trust, still has "a middleman"
(blockchain solutions implement this as many, distributed middlemen, IIUC, but
that detail seems immaterial to an end user) and thereby still requires a "cut
of" the transaction.

What would be the transaction cost for a couple-euro-equivalent vending
machine purchase, using Bitcoin today? What about the cheapest (per
transaction) cryptocurrency out there?

~~~
DINKDINK
Bitcoin Layer 1 (on chain) ~= .09 euro

Bitcoin Layer 2 (lightning network) ~= 0.0005 euro

Source:
[https://twitter.com/alexbosworth/status/1029425619350642688](https://twitter.com/alexbosworth/status/1029425619350642688)
These costs are independent of the bitcoin amount transfered.

>blockchain solutions implement this as many, distributed middlemen, IIUC

There are no "middlemen" required to transfer bitcoin via layer 2. "Middlemen"
required to transfer bitcoin via layer 1 are miners and a peer (could be the
miner) to relay a block to you.

~~~
kkarakk
and how long do these costs take to "verify", will i get the can of coke a
week after my flight has departed? last time i used bitcoin(6 months ago), it
took 2 weeks to send 200 dollars equivalent

~~~
mmt
2 weeks seems like an outlier. A recent thread [1] described someone getting
cash from an ATM via bitcoin in 20 minutes.

One of the comments theorized that this was because the ATM service used only
2 verifications instead of 6, taking a slightly higher risk due to the small
transaction amount (which implies a typical wait time for a large amount of an
hour, not 2 weeks).

Of course, even 20 minutes is too long to wait for a vending machine
transaction, so your point still stands. I also found an article [2] that
incorporates the problem of delay in even determining what the fee would be.

What was also interesting is that it [2] detailed a transaction cost 8x what
was quoted above, and seems to be backed up by
[https://bitinfocharts.com/comparison/bitcoin-
transactionfees...](https://bitinfocharts.com/comparison/bitcoin-
transactionfees.html) . It brings a new concern, volatility, to someone like a
vending machine operator whose transactions aren't "micro" but are always
going to be on the small end of "every day".

Presumably, it's possible to have a cryptocurrency without these issues.
Lightning may sufficiently solve this for Bitcoin (and/or other
cryptocurrencies), but that has yet to be seen in practice, at scale. If a
DDoS attack forces all (or even just some) Lightning transactions on-
blockchain, what does that do to transaction times and costs?

[1]
[https://news.ycombinator.com/item?id=17898721](https://news.ycombinator.com/item?id=17898721)

[2] [http://moneyandstate.com/the-true-cost-of-bitcoin-
transactio...](http://moneyandstate.com/the-true-cost-of-bitcoin-
transactions/)

------
olalonde
That just sounds like banks are worried about getting disrupted by mobile
payments. Even beggars in Shenzhen accept Wechat payments these days so I am
not buying the "think of the poor" angle. ATMs and banks lost a lot of their
utility since the rise of mobile payments.

~~~
TorKlingberg
As the article states, you need a Chinese bank account to use any of the new
mobile payment methods.

~~~
olalonde
That's not totally accurate though. I've been using Wechat pay for months
without ever linking a bank account. I can't withdraw my Wechat money to a
bank account but I can spend it. I think that's precisely what banks are
worried about: when more and more people decide they do not really need to
link a bank account.

------
dis-sys
It is a poorly written article. The biggest risk is never about the social
disadvantaged groups that could be marginalised by mobile payment, Alipay and
Wechat have all business motivations and resources to get them sorted. Just
look at how Didi paid both taxi users and drivers money to use its app a few
years back. Don't have a mobile phone to use Alipay? Surely Alibaba can get
you one with pre-loaded ads and Alipay - cheapest brand new 4G android phone
on taobao.com is $30. Don't know how to use it? Surely they can get someone to
teach you in person - average hourly wage is just $4!

The real risk is the fact that Alipay and Wechat can now ban anyone from
having a normal life in China - they can suspend your alipay and wechat
accounts and you are totally screwed.

------
ForHackernews
It seems like the Chinese government would be happy to subsidize cashless
payments for the surveillance potential alone.

~~~
weliketocode
Would the population greatly reduce spending on large swathes of items for
exactly this reason?

~~~
venatiodecorus
that would be quite terrifying if it were to occur.

------
ElBarto
Banks feel threatened because these payment platforms bypass them.

In my view, there is a real concern that these platforms are becoming major
financial institutions without being subject to financial/banking regulations.

At some point the Chinese government will have to look into that.

------
ArtWomb
Rise and fall of China's largely unregulated P2P lending startups is another
cautionary tale. Over 5000 companies existed at its peak a year or two ago.
And many have collapsed leaving investors protesting in the streets.

Scoring risk and determining borrowing rate at scale could see tremendous
efficiencies once a lot of data is obtained. Square Capital, for example,
simply uses a fixed rate around 10% against sales that is automatically
deducted from daily tills. But for micro-transactions, I don't see why 4-5%
can't be achievable. If the global rate of repayment skews much higher.

[https://technode.com/2018/08/02/the-rise-and-fall-of-
chinas-...](https://technode.com/2018/08/02/the-rise-and-fall-of-chinas-
online-p2p-lending/)

~~~
dis-sys
nothing about borrowing here, it is about paying out of your own pocket to pay
for taxi or dinner.

alipay is reporting losing 5 Yuan out of handling every 10 million Yuan of
transactions. that is the risk level for the topic matter.

------
fouc
I wonder if paying with cash is an issue in other countries also?

It might be possible to solve the issue of cashlessness by making it even
easier for the poor to use it, perhaps by providing super cheap cards that
somehow let people still make/receive payments without phones?

~~~
chvid
There is a somewhat parallel discussion in Scandinavia on going cashless.
Exactly the same issues: Poor people being marginalized, old people unable to
use new technologies. And the uniquely Scandinavian; how to do "black work",
work that is not reported to the tax authorities, without cash.

~~~
sharpneli
From Finnish perspective: Banks are mandated to provide basic accounts and
Visa Electron equivalent cards to anyone applying. This is because social
support and pensions are paid to bank accounts instead of as cash.

~~~
clubm8
That law sounds good, but does Finland have the same issue as the US with
regard to fraud protection?

In case you're not familiar, US debit cards are tied to a bank account, but
weirdly can be used without a PIN if they are run as a credit card anywhere
that takes MC/Visa/whatever-the-issuer-is.

However, the charge is deducted immediately from your account as would a debit
charge.

This means if there's fraud, even if you are refunded eventually you will be
without access to money for some period of time.

The easy fix is to withdraw some cash for day to day stuff from a trusted bank
ATM rather than constantly swipe your card.

Even if the government provides you a no frills bank account, the fraud risk
would make many prefer to use their card as little as possible in the USA.

~~~
kalleboo
VISA Electron (and I believe Maestro, the MasterCard equivalent) cards only
support "online" transactions, so they're able to reject transactions without
a PIN, without enough money in the account, etc. They don't even have embossed
numbers so you can't run them in one of those old carbon copy machines.

This is why they are issued to people who are underage or a credit risk since
they can't run an offline transaction without coverage in the account.

------
raxxorrax
create anonymous depots and I would gladly use cashless transfers more.
Currently, I just don't see the benefit. I use both forms of payment. Wouldn't
like missing one of them.

But especially in China, where buying the wrong products might be bad for you
social score, I would vastly prefer cash.

I wouldn't want to get any data in the hands of insurance companies either.

Cashless payment is easier? Depends on the scenario. I can just give anybody
20 bucks without any third party involved. You cannot beat that with any
technical solution.

~~~
usaar333
> I can just give anybody 20 bucks without any third party involved

Well, sure, if the good costs $20. If it doesn't, hope they have change. Or
you have change. And carrying around tons of change is definitely painful.

~~~
raxxorrax
Or I will let them keep the change because I am a generous person.

------
greatabel
The real situation is: as long as relatives and friends have someone who can
read and write in China, you can get a bank account with his/her help. In fact
bank begs you to open an account.

------
thoraces
Maybe Alipay/WeChat can use their vast amount of money and deep connections to
Chinese manufacturing to make simple devices that literally only act as a
wallet (hopefully simply enough such that even the elderly and
technically/actually illiterate can use them), and then partner with banks (or
become ones themselves) to provision bank accounts for people who they sell
those devices to.

If enough vendors stop accepting cash, then that alone ought to be reason
enough for people in rural areas to make the effort to get/purchase these
devices, assuming Wechat/Alipay makes the effort to distribute them.

Though it seems that there is limited market value to doing such a potentially
expensive and politically tricky maneuver. Classic scenario in a capitalist
world—the market doesn't see profit in protecting a helpless class like the
poor and elderly, so the market proceeds to ignore them and screw them over.

~~~
vorg
This would be the banks moving into the cellphone market -- a good way for
them to counter phone-based intrusion into their business model by
WeChat/Alipay.

------
ppeetteerr
The real crime here is the amount of tracking that happens on
foreignpolicy.com . Holy-Surveillance, Batman!

For realz tho', greater marginalization of the poor thanks to a move towards
digital reminds me of the many services that require an active internet
connection. I once had an internet provider ask that I look up their online
FAQ if I had trouble installing my internet connection. (thanks local ISP!)

It's like the saying goes: "it's expensive to be poor".

