
In Urban China, Cash Is Rapidly Becoming Obsolete - KKKKkkkk1
https://www.nytimes.com/2017/07/16/business/china-cash-smartphone-payments.html
======
thablackbull
I think this is a good illustration of the different approach in how China and
America approach the consumer economics space. In America, there is a very
heavy reliance on "trickle down". We create a "best-in-class", "top-of-the-
line" product that only the elite and wealthy can buy into. These people then
set the tone of how it will develop in the future. The first mover also tries
to do everything in their power to lock you into the ecosystem. Examples of
these are iPhones (and the app ecosystem), Tesla, etc.

In China however, they throw away that pride of creating the greatest and
shiniest. Instead, they start off with an "inferior" product but use the scale
of their population to bring down costs and they try to ensure everyone has
access. The top example is smartphones. In the article itself, "Even the
buskers were apparently ahead of me. Enterprising musicians playing on the
streets of a number of Chinese cities have put up boards with QR codes so that
passers-by can simply transfer them tips directly." China starts off with a
product that gives every citizen a chance to get in on, not just the wealthy,
and they build up their economy from the bottom up, rung by rung.

The way I see it, we have democracy in politics but in products, its
authoritarian because its guided by the billionaires and wealthy. In China,
they have an authoritarian political system, but democratic economy space
because they can actually vote with their wallets.

~~~
mahyarm
Android was released a couple years after the iphone and it has defined the
low end market. From the USA.

A big reason why QR codes caught on in China is because everything else was
really bad. In america, credit cards were 'good enough' compared to what was
in china, so QR codes didn't catch on that quickly. Also because it's a
wealthier nation, the typical merchant could afford the hardware required for
processing cards, but QR codes all you needed was a print off and the mobile
phone you already had as a merchant, which made more sense for china at the
time.

Then network effects kicked in and QR codes became the standard.

You see similar environment specific things that created this kind of stuff.
Like whatsapp took over the world because SMS cost something, while in the USA
it was effectively free and good enough, so whatsapp wasn't a good enough
thing to switch to.

~~~
nickrio
I'm a Chinese & living China, I shopping almost only with credit cards and
cash for privacy consideration.

However, I don't think credit cards in China are as popular as it is in the
USA. I could guess most Chinese people don't have any credit card.

Chinese traditional culture encourages saving, not loaning. And taking small
loans is exactly how credit cards works. So maybe that's why people here don't
like credit card very much.

QR pay (Or mobile pay, OR more specifically, Alipay and Tenpay etc) can acting
like a gate way between seller, user and bank. It can pay with the money you
already have, no need to loan from the bank. So I think it's a _Culture
Match_.

Beside that, take a wallet (Which is needed for protecting your credit cards
from been scratched) everyday is a burden. I could really be happier if I can
get rid of it from my EDC (I can't get rid of my phone, so).

~~~
seanmcdirmid
I think most people pay their balance off every month in the USA. Credit card
doesn't mean borrowing. The big problem with credit cards in China is fraud:
banks like ICBC will put the burden of proof on the card holder when a fraud
transaction occurs, rather than the merchant as in the west. I really hate
ICBC.

Anyways, debit cards work just like QR pay does, just like UnionPay already
does. The problem QR codes are solving is the lack of a POS terminal and
stream lining the swipe. Many countries have an even better technology in NFC
contact (including China, many newer UnionPay POS's include NFC, though the
card must have a chip to support it). Then you could just glue your debit card
to the back of your phone...(or use NFC in your phone via something like Apple
or Android Pay).

~~~
mrkrabo
Why credit cards and not debit cards?

~~~
theandrewbailey
With a credit card, you're spending money that you don't have, but with a
debit card, you need money in the account it's connected to.

------
hn_throwaway_99
I think this article hit the nail on the head when it pointed out that being
ahead of the curve at one time (with Japan and their advanced flip phones in
the early 2000s) can make it harder to adopt the next big advance because what
you have is already "good enough".

Thus, in the US, I suspect that mobile payments haven't taken off as much
because they are only very slightly faster to use than a credit card, as
opposed to cash, which is much slower with people counting out amounts and
cashiers counting out change. Before Android Pay came out and there was Google
Wallet, I tried using Google Wallet but was super disappointed - it failed
about 5% of the time, where my credit cards almost never failed. Lately,
though, I've started using Android Pay and I've been really impressed. Just
one tap with my phone and it's done, and it's very reliable. Still, though,
it's really only slightly faster than swiping my credit card, especially for
small amounts where a signature isn't required.

~~~
seanmcdirmid
Mobile payments haven't taken off in the west because credit cards have worked
well enough. In china, lots of small-scale businesses lack POS terminals while
Chinese banks put the burden of proof in case of fraud on the card user,
rather than the merchant as in the west. Using a credit card in china is an
absolute PITA.

Since returning to the states from china, I've been happily surprised that I
can just tap my credit card to pay at many terminals. This still pales in
comparison to austrailia, where this tap to pay seems to be ubiquitous.

~~~
tsukaisute
Just wish everyone would hop onboard quicker. We still need a lot of consumer
education.

For example, Apple Pay works great at Whole Foods. I use it every time. Other
people in line painstakingly pay with credit cards, despite holding an iPhone
in their other hand. The new chip cards take longer to process, even, 5
seconds or so.

~~~
lostboys67
So I have to have a apple phone worth several hundred dollars plus the
extortionate mobile charges in the USA instead of a free credit card with tap
and go I know which one I prefer

~~~
muninn_
Well you could use Android if you can't afford an iPhone. There are many
different options for mobile payments.

~~~
lostboys67
So only £150 fo a moto g then a bargain

------
HeavenFox
Born in China and moved to U.S. since college. In my observation, there are
several reason for the boom in mobile payment in China that makes it hard to
replicate.

\- Low transaction fee & minimal barrier. For merchants taking WeChat pay, the
transaction fee seems to be a flat 0.6%, compared to 2%-3% in the U.S. For the
food cart vendors and similar one man shops, they just use the person-to-
person payment feature (like Venmo), which has no transaction fee and does not
need a merchant account. While Square helped somewhat in the U.S., the
transaction fee, for many, is perceived as a rip off.

\- Cards are a pain to use. In the U.S. you sign. In EU you use a PIN. In
China you do both. Usually, it seems slower than cash! Mobile payment,
comparatively, is a breeze. However, it's quite difficult to argue that taking
out the phone, unlock it, open the app and show the QR code is easier than
using a card in the western world.

There are some deeper historical reasons for these two conditions, which I
would not dive into in this comment, but needless to say, it's a much, much
more fertile ground for mobile payment to blossom.

~~~
seanmcdirmid
> For merchants taking WeChat pay, the transaction fee seems to be a flat
> 0.6%, compared to 2%-3% in the U.S.

Where the heck is 3% even allowed in the USA?

> However, it's quite difficult to argue that taking out the phone, unlock it,
> open the app and show the QR code is easier than using a card in the western
> world.

Tapping the card to the NFC terminal is super easy. You don't even need to
take your card out of the wallet if its in front.

~~~
dis-sys
> Tapping the card to the NFC terminal is super easy. You don't even need to
> take your card out of the wallet if its in front.

The whole point here is how to entirely get rid of the wallet. your ID, your
cards, receipts, parking tickets etc should all be digital. in fact, that is
exactly what WeChat/Alipay are offering or battling for.

WeChat based ID card with approval from the Public Security Bureau:
[https://www.huxiu.com/article/169540.html](https://www.huxiu.com/article/169540.html)

~~~
weego
I'm more likely to always have a wallet on me than a phone on me. The base
notion that a phone is literally essential to daily life but a wallet is not
has yet is not a proven assumption.

~~~
seanmcdirmid
Many Chinese don't drive, so going wallet free is more feasible.

------
ksec
Some Perspective and Experience While i was in China.

I couldn't set up my WePay in time, so like the Author, I had to use Cash. And
from my experience between a Tier 2 City and Tier 1 City like Shanghai, it is
actually those Tier 2-3 City refuse to accept cash. They thought Cash were
cumbersome. And Shanghai may be more welcoming cash / Credit Cards for variety
of reasons ( Likely privacy ).

I tried to buy breakfast for $2, ~20 cents in USD, i didn't have WePay so I
paid in cash. The Shop owner said she didn't have any changes and decide to
give me the meal for free.

Over the 15 days, I kept thinking about QR code as Tech. Trust me, it is crap.
I dont believe there is that much time difference holding up the queue as
noted in the article. You have to Open up WeChat, and let each other scan,
input your payment by youself, show them you have paid. To me this is very
backwards. Octopus in Hong Kong, Scuria in Japan, Oyster Card in London
Transport, Offline Mobile Payment from Master Card and Visa, All these are 10x
better in UX. The merchants input my bill, I beep. That is it.

Then suddenly one day it clicked, and I knew why QR Code succeed. With NFC or
any other Wireless payment, you need something, a electronics, a beacon or
what ever for sellers to work. With QR Code, They "Print" a QR Code and
laminated it. And you can photocopy as many pieces as you want. The barrier of
entry for QR Code is so low every one could use it. At the expense of consumer
UX.

And then weeks after I visited China, Apple announced in WWDC, iOS 11 will
come with Auto opening QR Code in Camera mode. That, may have just made the
friction of using QR Code much more bearable for me. And it is likely both
tech will exist side by side in the long future. I cant see QR Code as it is
used today ever getting replaced by the more expensive NFC solution, and NFC
will likely stay in transport and other areas.

~~~
rsync
"With QR Code, They "Print" a QR Code and laminated it."

Can someone give me an example of what a merchant would encode into the QR
Code that would then allow them to receive money ?

Is it a URL ?

~~~
lnanek2
It's a URL, but just one used to open an app with some data. E.g.:
[http://iosdevelopertips.com/cocoa/launching-your-own-
applica...](http://iosdevelopertips.com/cocoa/launching-your-own-application-
via-a-custom-url-scheme.html)

And the merchant doesn't know this. Their setup process is typically: Open up
WeChat, login, click the plus in the top right corner, pick Money, click
receive money...

And of course paying and receiving is much easier once everything is setup.

~~~
zhte415
This is correct.

1\. Customer scans QR

2\. POS operator hits given this is a realtime hit and noone else is hitting
this QR at this time.

3\. Customer received bill, hits OK. Confirmation sent to both reatailer and
customer at the same time. Customer often shows retailer this has been
successful. Receipt printed and handed to customer.

4\. Customer walks away happy.

The transaction from 1-4 takes less than 2 seconds. Very efficient.

The stumbling of a new customer to get their phone out, activate pay, question
if any special offers are in offer however drags this out to a vastly greater
amount of time than using cash.

However, the tech UX is sound.

Edit: Live in China. Wish people could use cash as queues are much longer when
the 'human factor' is added in/ Perhaps this will fade, but it has already
been a few years and sees no fading as retailers add discounts, coupons, to
the payment, which leads customers to click around their phone rather than
being prepared in advance with discount coupons and cash.

~~~
ksec
One thing I forgot to mention, Receipt! For whatever reason Apple Pay or Visa
/ Master still hasn't figure this out. WePay you get Receipt All in one. And
this purchasing Data should live inside my phone, not in the cloud. and the
data could be used as personal Financial management. Realistically Apple
should be the one doing this, but pretty much like All of their services, they
are half hearted and they dont give a damn.

P.S - I wonder if QR Code can be made in Circle shape rather then Rectangular.

------
ajiang
I had the most surreal experience in the Shenzhen airport the other day. I was
out of cash, with only my credit cards and Android pay. There was no place in
the entire airport that I could pay with Visa or Mastercard - the first time I
felt truly helpless in China. Uber didn't work either. I was forced to set up
WeChat pay, which works absolutely everywhere.

~~~
TheSpiceIsLife
I'm guessing this has come about because VISA and Mastercard are US companies,
where as WeChat is Chinese owned?

~~~
seanmcdirmid
No, this is very strange actually. At least Starbucks would take credit cards,
and you should be able to find an ATM that takes your USA-based ATM card.
Never had this problem before.

I did feel screwed when I arrived in he Netherlands thinking my unionpay card
to work, just to find out it was one of the countries besides India where it
didn't. Thankfully, I could find some place that took credit cards...but I was
freaking out as I didn't have much convertible cash as backup.

~~~
kuschku
Germany also doesn't really take credit cards.

Well, didn't.

The EU limited fees for credit cards to 0.125% recently, and while EC (now
bought by MasterCard and called Maestro for SEPA) is still cheaper, credit
cards start being affordable for merchants. But almost none support it yet.

And Google still hasn't launched Android Pay, despite every ALDI having NFC.
I'd prefer if there was a local NFC payment option actually.

~~~
ocb
Germany's aversion to credit cards is somewhat cultural, isn't it?
Datenschutz, Datensicherheit, etc.

~~~
kuschku
Well, it’s a few things.

Germany already had a well-working giro system by the time credit cards were
invented – almost instant, free transfers between bank accounts were common.

Then, credit cards were obscenely expensive (and still are in some cases, many
credit cards cost a hundred euros or more per year for the owner, and taking
credit cards often costs 6-7% of sale price + 60€/month for the merchant, and
merchants can’t ask credit card users to pay more, so merchants would go
bankrupt if they’d do that).

And this is because credit cards in the US are only free and have bonuses
because they’re basically a tax on the less educated, with high fees and
interest. Germany, which traditionally has a culture where having debt means
being guilty (literally, that’s the same word), obviously is far more
cautious, so far less profitable.

And then the EC cards happened, which introduced the EMV chip, were safer,
faster, and had far lower fees, so they were supported everywhere.

And then there’s privacy.

And the fact that the US – especially MasterCard, VISA and PayPal – love
stealing customers money in legal transactions inside of Germany just because
it violates US law (which, fyi, does not apply in Germany, although the US
pretends it does), as [1] and [2] show.

All in all, credit cards are a horribly insecure implementation of a
ridiculous system that only works when it can scam enough people, interferes
with local law, and doesn’t fit the strict privacy morals of Germany.

    
    
        ________________________
    

[1] [https://cphpost.dk/news/international/us-snubs-out-legal-
cig...](https://cphpost.dk/news/international/us-snubs-out-legal-cigar-
transaction.html)

[2]
[https://www.reddit.com/r/technology/comments/ka26b/paypal_bl...](https://www.reddit.com/r/technology/comments/ka26b/paypal_blackmails_one_of_the_three_major_german/)

------
NamTaf
Everyone in Australia just uses paypass/paywave contactless payment with their
credit cards. I rarely carry any signifiant amount of crash for that reason.
It's essentially the same as using your phone except you use your credit card
and doesn't require a PIN or anything for <$100. Once I have a transaction
over $100 I can tap and enter my pin, or use chip and PIN, or if everything
fails occasionally I need to swipe and PIN. Most critically, _signature is no
longer allowed_.

Without having used WeChat's approach with QR code scanning, it doesn't seem
that different for the end user in practice. Either way, you're scanning an
object you carry against some target environment and a merchant is processing
the transaction for you. It's even closer once you use eg: Apple Pay with your
CCs loaded into the Apple system - you're tapping your phone rather than
scanning via the camera.

I'm guessing that the CC infrastructure simply wasn't there and pushing out
EFTPOS units was a far higher barrier to entry than simply running an app on
your newly acquired cheap chinese smartphone. As such, the CC merchants missed
the boat whereas the big phone app companies got in on the ground floor. On
the flipside, many Western countries had all the EFTPOS terminals already, so
contactless just became the next iteration on that.

I don't really necessarily agree with the problem of the country building
their commerce systems around Tencent, etc. as 'private companies' since most
of the west hinges on Visa, Mastercard and to a lesser extent Amex. They're
all private companies too. Maybe the government will step in and standardise
the QR code system eventually to reduce the risk. I don't really see it
playing out much differently to how the West did with CC contactless.

~~~
rahimnathwani
"Without having used WeChat's approach with QR code scanning, it doesn't seem
that different for the end user in practice."

The difference is that _anyone_ can accept WeChat payments, no matter how
small their transaction volume.

I haven't been to Australia since 2002, so am a little out of touch. Are there
small businesses like fruit stands? Do they take paypass/paywave?

What about buskers?

~~~
NamTaf
That's a very valid point. Not _everyone_ can become a payment recipient with
this with the same barrier to entry. In that sense, it's definitely less
flexible and I guess that's where FB and co. have tried to make inroads with
cash transfer. I know Commonwealth Bank made an in-house system for doing
instant and easy transfers from an app like that.

Regarding your question, anyone who previously took a CC via an EFTPOS
terminal would now take paypass/paywave. It's not ubquituous amongst the
standard sunday market/food truck retailers, but it's not uncommon. I went to
a French food and wine festival a couple of weeks ago and the majority of them
used EFTPOS, but they also not infrequently do the market circuit.

Essentially, anywhere that previously had EFTPOS now naturally has
contactless, and as the critical mass of people who don't carry cash grows,
more smaller retailers are pressured into getting EFTPOS. The terminals are
handheld, battery powered and connected to the mobile network now so you don't
even need electricity. Granted, I don't see a time when buskers end up get
EFTPOS terminals.

------
hbarka
Take the credit card swipe versus chip example. The chip is an improvement
over the really old swipe tech in theory. In the US, using the chip is a
terrible experience because it takes a lot longer for the process to complete.
Why? Because merchant processors have no interest in putting the chips on a
fast network because they can get higher fees on the swipe and conversely the
stores are charged higher fees for enabling the chip. There you go. There's
the moral question and the profit question all in a real example that didn't
improve the experience for the end user.

~~~
usaphp
The faster the lines are moving - the more transactions per day can a store
process, thus more fees for processor. I don't see a logical reason for
processors to artificially slow down payment process just for a tiny fee
difference, no? plus they theoretically get less chargebacks and fraud
activity with chips.

~~~
zanny
Except the cost of slow transactions is not eaten by the payment processor.
The store just has to add more checkout lanes or clerks. The payment processor
also never gets blamed - if the process is slow, the customer just blames the
store.

~~~
usaphp
> the cost of slow transactions is not eaten by payment processor.

> if the process is slow the customer just blames the store.

If the customer does not like long lines and slow transactions in a store -
they will leave, and the processor will see less revenue from fewer
transactions because of that

~~~
zhte415
There are only 2 card payment networks of worth and most cutomers have cards
from both. They don't care.

------
theylon
Living in China for the past two years - Important thing to remember - in
China and in most of South-East Asia the tech boom came at a later stage when
smartphones were already prominent. Android + Chinese manufacturing made it
possible to produce cheap smart phones. The result is that these countries
have completely skipped the laptop phase and went straight to smartphones,
most of the population doesn't even know what a laptop is. What the west calls
eCommerce (amazon, Ebay etc) is called mCommerce in Asia (Taobao app, JD.com
App etc). Asian consumers find it easier and more natural to shop using
smartphones rather than laptops like Western consumers.

Oh and yes, When I leave the house I don't even take my wallet, everything is
paid using wechat.

~~~
pmontra
I've been in China as a tourist for three weeks two years ago. I paid
everything with cash. Easy.

What would I do now if I have to pay with WeChat and I obviously don't have a
Chinese bank account? Tourists don't have time to waste in banks and unless
bank accounts are created and activated on the fly it would be pointless to
open one. Maybe open an account in advance from home? Is that possible? Or
WeChat and Alipay start operating with accounts in multiple countries.

~~~
theylon
You don't actually need to have a bank account in order to use Wechat payment.
Someone can just send you money over wechat and it would still work, just a
1000rmb/month limitation. If you're a tourist it should be fine.

------
itchap
I have been living in Shanghai for few years now. Alipay and Wechat are really
a big thing. It is far from the vision of mobile payment people have in Europe
for example, where it is more of solution for small payments.

People are using Alipay and Wechat pay for everything, being online shopping,
restaurants, supermarkets, train tickets, electricity, water, even some tax
declaration. So it is not just a replacement to cash and bank cards, it is
starting to go beyond that.

I go for months without having any cash or bank cards on me. Unfortunately
everything falls apart when my phone runs out of battery.

~~~
lyricat
Or phone stolen.

~~~
justjimmy
Or wallet stolen (arguing for the other side).

------
2muchcoffeeman
Is this faster than PayWave?

Ever since I could tap to pay with my card in AU, I have been going months
without using cash. I usually still have money, but never use it. I've gone
almost 2 months with literally 0 dollars in my wallet.

~~~
kripy
Contactless payment systems are prevalent in Australia. And even before tap to
pay we were able to insert cards, enter a PIN and pay. What has happened in
China is that they payment systems have been baked into the apps where, in
Australia, this occurs at the terminal (EFTPOS as an example) which is app
agnostic and tied directly back to the bank gatewys.

------
justjimmy
And for those rare places that only do cash, it's not uncommon for the person
in line to turn around and ask a stranger for cash and they'll pay that person
in a WeChat transfer. Done in seconds. Happened to me and observed it myself a
couple of times.

With digital wallets, there's zero need for credit cards and their predatory
interest rates.

China is just absolutely crushing it. The Amazon Self Serve store that's still
in testing in USA? Tao Bao pushed their version and it went live last week.

~~~
ec109685
> With digital wallets, there's zero need for credit cards and their predatory
> interest rates.

How is there zero need? If don't need to borrow money longer than 30 days, you
pay zero interest. If you do need a bit longer to pay, you have that option.

~~~
icebraining
Since banks aren't charities, the fact that those 30 day loans are "free" just
means you're paying for them _even if you don 't use them_.

~~~
ec109685
By using a digital wallet, you personally don't save any money over a credit
card.

------
EZ-E
Can confirm, in most supermarket, paying take literally one second. You pull
out your phone and show your Alipay/WeChat QR code, the cashier scans it and 1
second later it's done.

People paying in cash is a small minority

Speeding up lines, they also can have more clients for less cashiers

In France, most people pay with a bank card, the rest with cash. The process
is longer and less user friendly

~~~
chime
Does your QR code change from one transaction to next?

~~~
EZ-E
Yes. Also if you keep it open for some time, the code will change automaticly

------
lucaspiller
It sounds like one of the reasons why this has grown so quickly - compared to
mobile payments in the west - is that you can just sign up and have it
instantly. Apple Pay and the like need your bank and the retailer to support
it which doesn't happen straight away. In this case it sounds very much like
the dream of Bitcoin and cryptocurrencies.

The article mentions that not everyone has access to it though, if you just
sign up why is that (they don't want it or something else)?

And what about privacy? Obviously everything you buy is being fed into a big
government database somewhere. Do people in China not care about that (has
privacy been eroded so much)?

~~~
Juha
> And what about privacy? Obviously everything you buy is being fed into a big
> government database somewhere. Do people in China not care about that (has
> privacy been eroded so much)?

I don't see how it's different from using credit cards or any other digital
payment method.

~~~
ian0
Yep. If anything a wallet is less regulated than the traditional banking
system.

------
psy-q
It's interesting that they worry about lock-in from Tencent and Alibaba in
China while not mentioning the same lock-in and issues for Google, Microsoft
and Apple in the rest of the world.

People who don't want to get a Google account already get a degraded product
when using Android phones, and I'm not even sure an iPhone works without an
Apple ID. That Google Wallet flopped is just a happy coincidence in this
regard, but Apple Pay so far hasn't, and then we have the same situation there
as with e.g. Alibaba.

Some nations like Switzerland at least have a unified national mobile payment
platform (Twint in this case) carried by an alliance of banks. This doesn't
put all the power with just one or two privately owned US or Chinese
companies, and it brings banking regulations into the game. Maybe that
approach should be copied, but it only works in countries that have those
regulations and banks willing to cooperate.

~~~
erikb
Apple Pay hasn't flopped where? Actually it's the first time I here about its
existence. So if it's not just 2 weeks old I strongly assume that it in fact
has flopped. I have an iphone 6s currently btw.

~~~
psy-q
I see it advertised a lot and the biggest kiosk chain in Switzerland accepts
it. But I don't know anyone who uses it apart from some overheard
conversations on the tram. Totally anecdotal, though. I don't think Apple
releases numbers.

------
williamle8300
No thanks. Cash is king. Money should never be traceable, and you should be
able to buy with anonymity.

~~~
zanny
Except most people don't care if they are being tracked and if they aren't
anonymous, so systems like these emerge using the lack of anonymity as a
feature.

I am one of the folk in the inevitability of cryptocurrency camp (not btc or
any existant coin, though) but that world is one where it becomes very easy to
correlate wallets, or at least where the funds come from, with the person
making the purchases.

For everyone who wants anonymity they can keep using bitcoin and gold after
fiat paper and coins are gone.

~~~
mac01021
Maybe bitcoin. Not gold: [https://www.thesun.co.uk/news/2642475/nasa-to-
explore-astero...](https://www.thesun.co.uk/news/2642475/nasa-to-explore-
asteroid-16-psyche-which-is-so-valuable-it-could-crash-the-worlds-economy/)

------
foobarian
This brings me back to college days... when you could use your student ID to
pay for everything instantly. And the ID# was encoded on the magnetic strip
unencrypted.

------
lostboys67
This is more to do with the PRC wanting to control the populace ;-( other wise
why are wealthy Mainland Chinese desperately buying up real-estate over sees
as a method of moving wealth out of the country.

------
Animats
Alipay is trying to expand into the US. Citcon is trying to get US merchants
to integrate Alipay. First Data is on board with Alipay. At least 4 million US
merchants already accept Alipay.

That's probably more traction than Google Pay or Apple's payment system ever
got.

 _" Alipay, leader in online payments. 400,000,000 Users."_

~~~
baybal2
It is better to say that 4m merchants do have access to Alipay, but may elect
to not to use it.

I knew quite a few places in Vancouver where people were ready to accept
payment by zhifubao id, but nobody had qr scanners or anything. It may end up
like Paypal local - come to shop that accepts paypal, ask if they support it,
and yeah "transfer money to id 4746474, call me back when you are done"

------
1024core
I don't understand why there's no mention of M-Pesa
[https://en.wikipedia.org/wiki/M-Pesa](https://en.wikipedia.org/wiki/M-Pesa)

When I heard about it several years ago, it was, effectively, the largest bank
in Kenya.

------
tristanj
If you are curious how smartphone payments work in practice, Here's a video of
someone using Wechat Pay to order squeezed-to-order orange juice from a
vending machine

[https://www.youtube.com/watch?v=Um53J3shL7I](https://www.youtube.com/watch?v=Um53J3shL7I)

In practice, scanning and paying is much faster than shown in the video. He is
using an old phone, on a newer one scanning the barcode takes around 0.5
second and the verification takes 2-5 seconds (not 15 seconds as shown in
video).

Paying in stores works differently. The WeChat app has a wallet section with
your personal payment QR code (which changes every time you open the app). To
pay in a store, let the clerk scan it like this
[https://wx.gtimg.com/pay/img/wechatpay/intro_2_1.png](https://wx.gtimg.com/pay/img/wechatpay/intro_2_1.png)
then enter your six digit payment passcode (optionally, you can scan your
fingerprint). After entering your passcode, it takes around 5 seconds to
process and verify. You get a receipt as a WeChat message (last screen shown
here [https://www.royalpay.com.au/resources/images/retail-
example....](https://www.royalpay.com.au/resources/images/retail-example.png)
).

Many stores (usually restaurants) have a nearby QR code you can scan to follow
the business's WeChat "Official Account". Follow this account to earn loyalty
points, discounts, and freebies whenever you pay with WeChat wallet at this
business in the future. The business can send you chat messages about
promotions too (you can mute them if you like). This feature ties in really
well with WeChat pay.

There are other uses of WeChat Wallet too, most of which are shown in this
promo video:

[https://www.youtube.com/watch?v=1r95Q2qElFM](https://www.youtube.com/watch?v=1r95Q2qElFM)

At timestamp 0:09, that sign/sticker signifies this store accepts WeChat Pay

At timestamp 0:24, watch the clerk scan the customer's barcode

At timestamp 0:30, the customers scans the store's payment QR code and types
in the amount they want to pay. More at 0:50

At timestamp 0:38, this store has a dedicated QR code scanner

At timestamp 0:50, it's the same as 0:30 where the customer types in how much
they are paying. Paying like this is common at street stalls.

At timestamp 1:00, two friends use WeChat Wallet to transfer money to each
other

Opening WeChat wallet on your phone is very easy. On iPhone just force touch
the WeChat app and a quick menu for the QR code scanner and WeChat Wallet
appears. In my opinion, it's much faster and more convenient than paying with
credit card.

~~~
rahimnathwani
This should be the top comment.

To me, the mode where the store scans your temporary payment QR code (like in
McDonald's) feels like signature-less swiping in Starbucks in the US. You
can't confirm the amount beforehand in either case. But the WeChat way seems
more secure, as no one can clone my temporary QR code.

------
dis-sys
Criminals are now targeting those QR codes. They just walk around and put
their own QR code stickers on top of the legitimate ones, hoping that future
payment will end up in their accounts.

What really impress me is that Alipay immediately responded to such reports
and agreed to foot the damages. They also started to promote the voice
notification feature so street vendors don't have to stop periodically to just
check whether they are actually getting paid.

You will never ever see Chinese big four state owned banks take good care of
their customers/users to such extent. It is definitely a good example on why
capitalism is the best choice in 2017.

~~~
DarkKomunalec
"It is definitely a good example on why capitalism is the best choice in
2017."

Until the company becomes too big, and can do whatever they want without
losing customers. See various horror stories about Bank of America, Comcast,
PayPal, management engines in Intel and AMD chips, 'telemetry' in Windows,
etc., for counterexamples.

~~~
dis-sys
I actually just realized one potential issue: there are two online payment
platforms in China, they are owned by Tencent and Alibaba. If someone piss off
both of them, e.g. some business disputes which is not really unheard of, they
can choose to just refund all your money left in your account and close it.
The consequence is obvious - you would be isolated from a normal life if you
live in China.

From that aspect, there are tons to learn from what happened in America.

------
nichtich
The success of AliPay and WeChat Pay is mostly the result of a good banking
infrastructure. Even before these services popping up, you already can
transfer money from any bank to another bank instantly and with no fee (or a
small fee, depending on the bank and your account type). PBoC has been pushing
banks to make interbank transfer efficiently and cheaply for years. The new
mobile payment systems just use the already built infrastructure and replaced
the ugly out of date bank webpages with cute looking apps and also greatly
relaxed security so you don't have to keep the 2fa usb key with you anymore.

~~~
mcv
Instantly, so the money is on the new account directly? It's always surprised
me that transfers still don't happen that way in Europe. But feeless
transactions from any bank to any other bank also exist in Europe, and have
existed for a long time within many European countries. So that's hardly
unique to China. Yet we still pay mostly by debit card with pin.

But reduced security doesn't sound like a very good idea.

~~~
markvdb
The European payments council is working on "instant" SEPA transfers, within
ten seconds. The first applications are expected in 201711.

[https://www.europeanpaymentscouncil.eu/what-we-do/sepa-
insta...](https://www.europeanpaymentscouncil.eu/what-we-do/sepa-instant-
credit-transfer)
[https://en.wikipedia.org/wiki/Single_Euro_Payments_Area](https://en.wikipedia.org/wiki/Single_Euro_Payments_Area)

------
mikkelam
In Denmark we have been using mobilepay[1] for a couple years now. Contactless
credit cards are still widely used as not all stores accept mobilepay, as a
result it is mostly being used between friends, e.g. when you split the bill
at a restaurant

[https://en.wikipedia.org/wiki/MobilePay](https://en.wikipedia.org/wiki/MobilePay)

------
Hasz
Cash will never die.

Fundamentally, a wechat/alipay transaction is traceable. Traceability is great
for expense reports, but a non-starter if you're a drug dealer -- especially
with China's draconian drug laws.

Even if you were to launder the money through fronts or a series of
transactions, a state level actor (i.e, China) would have no real difficulty
in tracking down such activity. With cash, this becomes much, much harder in
cost, time and manpower. Not impossible for a state, but certainly an
effective deterrent from casual or low level investigation.

This difference in traceability will keep cash and other compact tangible
mediums of value (precious gems and metals, ivory, drugs, etc) in use by
subsets of the population for as long as people value the relative anonymity
and are willing to put up with the costs and risks a physical medium entails.

~~~
wklauss
> Cash will never die.

I wouldn't say never. It can be marginalized to the point that it becomes
annoying for vendors to rely on it and all you need is a little bit of
regulatory push to stop cash. By then, most shoppers would not care enough to
protest.

As for drug dealers... what can I say... i don't think their needs will be
taken into account and as far as I know, bitcoin is already working for them
in that regard.

------
jccalhoun
I had heard of WeChat and AliPay but didn't know how it worked. It is quite
similar to what Walmart does with their Walmart Pay
[https://www.walmart.com/cp/walmart-
pay/3205993](https://www.walmart.com/cp/walmart-pay/3205993) and what a number
of retailers tried to do with CurrenctC
[https://en.wikipedia.org/wiki/Merchant_Customer_Exchange](https://en.wikipedia.org/wiki/Merchant_Customer_Exchange)

CurrentctC never made it out of test marketing and I don't think Walmart Pay
is taking off.

The difference is that these two are from big retailers and the Chinese
versions are from apps or online retailers.

~~~
eddieplan9
The real difference is that in China, WeChat Pay and AliPay are better than
alternatives (i.e. cash), while in the US, Walmart Pay and CurrentC are worse
than alternatives (i.e. credit cards).

------
rz2k
I was sure I'd read a lot of comments from people living in China who
disagreed, because of this column[1] as well as a few others like it.

However, I realize that column is almost 50 months old. At the time it was
part of a worry, because it was very difficult for anyone to understand what
was going on in the Chinese economy and therefore which economic policies
would be harmful. (Eg. stimulus during bubble, or tightening during stress)

Has cash really become a lot less popular in the past few years?

[1] [http://foreignpolicy.com/2013/05/01/on-getting-paid-in-
wads-...](http://foreignpolicy.com/2013/05/01/on-getting-paid-in-wads-of-cash-
in-china/)

------
hunvreus
I haven't had cash on me for more than a year now.

I use Alipay or WeChat for pretty much anything: groceries, bills, plane
tickets, hotels, rent...

I actually have to use LastPass to remember the codes of my debit/credit
cards.

Even traveling to Hong Kong feels backward; you have to go to an ATM, get
money and then struggle with change in your pockets for the rest of the week.

I really hope this trend goes global and helps create a more competitive space
for banks; it would be good to see them trying to innovate a bit.

------
arkitaip
It's a shame that WeChat outside of China is just a chat app. But I guess that
when China is your home market, then that's all you really need.

------
allengeorge
Perhaps another factor in this shift is that there's a higher incidence
(anecdotally) of counterfeit bills - especially larger notes?

~~~
brisance
The largest renminbi bill is worth about 14.7 USD. I think it would factor
into why people would go cashless.

------
known
Aren't Chinese compromising their Privacy?

------
erikb
Tourist shops and shops that sell milk powder in Europe also accept at least
Alipay already.

And while it's hard to connect your Wechat account to your bank account as a
foreigner, it's like everything in China: If you have Guanxi it's no big deal.
You just give cash or bank transfers to your friends and they send you Wechat
money.

------
inlined
I recently took a trip to Shanghai and Kyoto and was blown away by this. In
Shanghai even the taxis displayed their QR to accept payments. Kyoto accepted
WePay and AliPay; the latter was most impressive because I was told AliPay
requires the Chinese equivalent of a SSN

~~~
rahimnathwani
Alipay overseas (e.g. in Kyoto) only works for Chinese citizens.

Anecdote: I tried to pay with Alipay in a Uniqlo store on my last trip to
Japan. The payment failed, so I paid by card instead. A minute later I
received an SMS from Alipay telling me it was because international payments
are only available to Chinese ID card holders.

------
diefunction
The point is, you dont need to take a card, you can pay eveywhere, all you
need to bring is your phone. Nobody thinks bringing a phone, a wallet and
keychain everywhere is quite painful ??? i would rather to use my phone to
open my door.

------
sjg007
Surprised that QR codes are not more ubiquitous in the USA. Seems like a great
platform.

~~~
teknologist
But not as safe. There was news about people putting their own QR codes on
rental bikes so that people mistakenly send cash to them in China.

~~~
grok2
It seems to me that QR codes could make it easy for someone to replace the
original QR code with a different QR code at any place that accepts them and
the merchant is none-the-wiser (unless there is some form of integration back
to their PoS system) -- it seems like this could be a new form of skimming
(stick your own QR code over any merchants :-)).

~~~
TACIXAT
If most are screen based, you could just dynamically generate them and have
them expire after N minutes. If someone wants a printed one make them jump
through an application process for a long standing code.

~~~
teknologist
They do for individual payments but storeowners sometimes tape their printed
QR codes to walls and counters and they seem to want accommodate this use case
too (essentially POS-less or "bring your own POS")

------
nabla9
In the Nordics it's contactless credit cards in shops and mobile pay in
vending machines and between individuals.

Difference for consumers is minimal. Cards can be faster to use.

------
yufeng66
One important factor is the Chinese government view cash as necessary evil.
They prefer the money to be in the digital form to avoid issues such as grey
economy and difficulty in collecting tax. As such they refuse to issue large
denomination cash bills. The largest RMB bill is only 100, which is about 13
USD. It was first issued in 1988, when the nominal GDP was only about 2% of
the current size. Obviously this makes large transaction in cash difficulty.
Thus created an opening for alipay and wechat.

~~~
dis-sys
It is the other way around: it has been repeatedly reported that there is no
plan to issue larger denomination Yuan because the online payment systems are
already doing the job for eliminating cash.

------
alvil
Only idiot can support cashless society creation.

------
notadoc
In urban USA, cash is pretty rare too. Almost everyone uses credit.

~~~
thegayngler
Not in NYC. Many many places have limits on how much you must spend before
credit card use is allowed and even then some places require cash anyway.

~~~
notadoc
Sure but the limit is usually $5, and realistically what is being bought under
that amount exclusively at any regularity?

------
miguelrochefort
Why isn't there a WeChat equivalent in the west?

~~~
reactor
Its better to have some privacy.

~~~
ian0
While a mega-portal for all your digital needs sounds like a privacy nightmare
- I can think of a few US examples where this was overlooked in favor of
utility!

------
Zolomon
Sweden has been mostly cash-free for 8-12 years now.

~~~
arkitaip
True but we use debit/credit cards. They can be incredibly fast if the POS is
connected via broadband (instead of land lines, which are increasingly rare).
Personally, I would like to see Klarna roll out in-store "invoices" for small
purchases so you can always shop as long as you have your mobile (even if you
don't have money on your account).

------
chj
Paying with phone means you can go out wallet-less.

------
baybal2
Same thing in Russia, but for a different reason.

I think no banker in sane mind will issue a credit to an average Russian

~~~
dang
> _no banker in sane mind will issue a credit to an average Russian_

No national putdowns on HN, please.

We detached this subthread from
[https://news.ycombinator.com/item?id=14785516](https://news.ycombinator.com/item?id=14785516)
and marked it off-topic.

------
frozenport
Fucking non-sense, American's strive to create products that are different.
The Chinese stereotype is to copy those. The copies are often not cost
equivalent won't perform the same function as the original. Further it is
often done with the full intent of tricking people, for example knock off
Apple stores, Italian clothing etc.

In absolute terms the average Chinese person can't afford higher quality
items.

~~~
monocasa
That's exactly what was said about Germany in the 1880s, and Japanese goods in
the 1960s. It's the normal progression of truly developing economies.

~~~
slackingoff2017
Ignoring all copyright law? We're not talking about stuff that is cheaper
equivalents which I'm fine with. The problem with China is counterfeiting
brands.

Say I make a charger and want people to think it's high quality. To do this, I
spend 90% of effort on making it look exactly like an Apple charger. It even
works, kind of, maybe once.

This is a straight up scam, and the kind of crap that people knock China for.
And such behavior is pervasive with the Chinese govt largely looking the other
way. I'm fine with China competing but their government needs to stop the
rampant scams. It hurts the more successful Chinese brands just as much.

~~~
zanny
Why do you blame the Chinese government when, if you want to prevent scam
devices from entering your market, you should have your own customs and trade
inspectors turn away counterfeit merchandise? The Us _lets_ counterfeit
products in. Likewise, if the Chinese government doesn't want to obey US law
involving copyright or trademark, which is not an international policy, it is
simply the law of the US, that is entirely their sovereign right to.

It would also, then, be the US' right to negotiate trade agreements knowing
that.

The Chinese government does some fucked up shit, but not being under the foot
of US global intellectual imperialism is not _them_ being the villains, its
the US for trying to force a global framework of IP, and especially US' idea
of permanent copyright, on everyone else.

~~~
slackingoff2017
The patents and trademark and copyrights being infringed are largely global.
China has a multitude of agreements to enforce the rules, they just don't.

This also has nothing to do with the US and everything to do with China. China
counterfeits everyone's shit not just one country, but I appreciate how
incredibly biased you are against the United States. I didn't even mention the
US in my original post so I have no idea where you got that tirade. Copy
pasted from your favorite Chinese government mouthpiece maybe?

The US can't inspect every piece of mail to find counterfeits, they need to be
traced to the source, which China is unwilling to do.

