> 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.
I travel frequently to China. Didi (Chinese uber) works with foreign cards. nothing else will work. the easiest way to get money on wechat is to "buy money" from someone you trust/know: give them cash and they will send you money through wechat, that you can then use to pay.
you can link a US issued debit card as a "credit card" under wechat and you can then accept money from others (and also send money from your stored balance)
not true. unless it was like that before. I came back from a trip a few weeks ago and that's how I got money in my wechat account. And I don't have a bank account linked.
To clarify, this has recently changed. In 2017 you could not accept money in your WeChat account without a Chinese card or bank account. As of 2018, adding a foreign credit card enables the "money" feature" and allows you to receive funds.
>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.
Yup, this happened to me just less than a year ago. I spent extended time in Xiamen and I had to open a bank account, get a local phone in order to WeChat verify and also use AliPay. Once I did that it was smooth sailing. Yes, when I returned home all of this was for not. I can't use it unless I return.
Also, even though I had RMB nobody wanted to take them. Often they dont have money for change, etc. My phone was my best friend the entire trip.
I just read a very interesting history book (Before European Hegemony, by Janet Abu-Lughod (sp?)) that said that China was one of the first countries to have paper currency and that as early as like 1100 if I remember correctly, foreign merchants would try to go to the market with gold coins and they would be turned away and told to go trade in their gold for currency.
If the book I was reading was correct, there was a period of years where all precious metals were required to be taken to a government building and traded for paper currency, though I'm not sure how long it lasted. But you're right about the silver being the main metal in use.
> The Yuan government attempted to prohibit all transactions in or possession of silver or gold, which had to be turned over to the government.
> Under Külüg Khan the levels of inflation rose to 80% as the government kept printing more banknotes due, and in order to ensure the government’s control on the currency Külüg Khan [r. 1307-1311] banned the usage of silver and gold coins, and stopped the circulation of silver certificates in favour of fiat banknotes. ( https://en.wikipedia.org/wiki/Yuan_dynasty_coinage )
But that was a massive failure by a khan who reigned for three and a half years.
Thank you for the research, I was way off! That's quite interesting.
Thinking on it some more, I think her information may have come from something ibn Battuta had written, which matches your time period, and also explains perhaps why she didn't have much to say about how well it worked.
I also think the book was from the late 80's so I wouldn't be surprised if historians have learned much more since then!
You are not wrong. The AD1100 isn't just Yuan Dynasty, it was part of the South Song Dynasty as well, where they invented ( or popularise ) paper back currency.
This is why you’re starting to see services like Swapsy and Megachange. They take USD via PayPal and “convert” or “match” it to RMB in WeChat and Alipay.
I think you’re right though: this is going to be a concern for tourists to China. Maybe that won’t be a concern for the locals or maybe the cashless services will figure out some way to take foreign cash for electronic credits, like these exchange services are doing.
China isn't a tropical island country with 75% of income from Tourism. It may be an acceptable risk to inconvenience tourists to have the desired local monetary policy?
The question doesn't really make much sense applied to the whole country, does it? It's more important I think to point out which places are important, and also have high tourism
ie Also quick googling but honk kong apparently has 16% of its income, and 20% in 2014, from tourism[1]. (currently trending downwards, perhaps related to this?) This is also presumably the kind of area where these apps are most important.
I'm also not sure it constitutes desired monetary policy, so much as an accident of natural processes that wasn't stopped. Whether they like it or not, I doubt it was planned, and I doubt it was truly wanted. More like, accepted.
Hong Kong is a bad example as cash is still king here and they use the Hong Kong Dollar not RMB. In my experience the locals don't really use wechat either unless they need to talk to people in the mainland.
So once someone gets a local phone number and bank account to open the WeChat and Alipay, they can then use Swapsy/Megachange? Or does Swapsy/Megachange have a way around the local bank account/phone # requirement?
Looks like there are various options for tourists, including using AliPay, which accepts foreign cards, or get a verified WeChat user to send you a special link that lets you add a foreign card:
From memory WeChat verification only allows one verification every few months (and only if your account is old enough). In theory you can get a hostel employee to verify you, but they have usually used up their verification for that quarter.
AliPay only accepts foreign credit cards for Taobao purchases. You can't use them for in-person purchases; I verified this with Alipay's support team when I found I was being blocked in China.
I tried using Alipay with foreign card a year ago and it didn't work. I had to get a Chinese phone number and Chinese bank debit card to start using Alipay (this proved to be possible even on tourist visa, but only because of a friend who lives there, let me use their address and helped me with the whole process).
Hopefully it's changed by now!
> 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.
Just visited China a few weeks ago. While it is not possible to open an AliPay account, you can verify WeChat pay with a foreign CC. You then have a problem of getting RMD actually added into your WeChat wallet; while I worked with a friend to manually transfer currency (Venmo'd him USD, received RMB from him over WeChat), my friend also recommend https://theswapsy.com/.
Warning: WeChat has absolutely terrible customer support compared to Alipay. My account got locked at one point and somehow magically opened up after a few days - I could never get a hold of any CX agent.
Yep. I travel to China frequently and this is a huge pain. There are some moderately useful workarounds you can do, like floating money from a friend in your WeChat Pay. But at the end of the day, you are highly dependent upon people hooked into the native financial infrastructure.
I was just in China a couple months ago, and you can definitely use cash everywhere. But it does help to be with someone who can pay using APP (ay pee pee, that's what they refer to it as)
Interesting. I wonder how long it will take before currency exchange kiosks in the airport have a straightforward way for visitors to exchange their foreign currency for Chinese currency in an app that can be used for local payments. Definitely not a hard technical problem to solve, though maybe bound to get caught up in political and bureaucratic delays.
Most of the things you mentioned are theoretically possible without a bank account but you have to find someone willing to send you money on Wechat in exchange for cash. You can also add a foreign credit card on your Wechat or Alipay to buy things online (e.g. Meituan, Taobao, etc.).
I ran into this myself on a two week trip to China. They really should have something like the allowance of a 1000RMB balance on WeChat without a bank account for visitors.
We had a 72 hour layover visa en route to another country, stayed in Shanghai, paid for everything with normal credit cards, no problems. WeChat is only one option, but credit cards are another for foreign travelers. We mostly only did shopping at restaurants, hotels and larger grocery stores, but I suspect that is what most tourists do. We had $100 USD in local currency as a backup but never used it. This quarter we traveled internationally for 9 days to central america, took out $70 USD in local currency, paid for everything with credit cards except one tank of gas which was about $36. I don't see retailers dropping credit card payment options in the short term.
For the most part you won't have a problem with credit cards in very touristy areas. Once you leave the bubble, however, the acceptance rate for credit cards in China drops very quickly.
Yeah I was amazed at how easy it was to do all this stuff provided you had a way to get money in your account. I had to constantly try to find people willing to take cash to send me credits. I even saw people on Fiver who would do this as a service. I never was able to get Uber to work with any of my 5 credit cards. Would have been awesome though!
I've also heard that getting many financial products (e.g. credit cards) in China is very difficult without citizenship, and Chinese citizenship is virtually impossible to acquire by naturalization.
Recently, they've started new laws and process for foreigners to get permanent residence (green cards), which would allow foreigners to do everything that citizens do, including even buying apartments. Not sure what the uptake is though, and the requirements are pretty strict.
They’ve been talking about green cards for foreigners for as long as I was there (2007), every year it will be different this time, every year it isn’t.
More to the point: green cards are so rare most Chinese institutions don’t know what to do with them. They don’t actually help that much beyond just getting into the country.
Buying an apartment is usually just subject to residency restrictions whether you are Chinese or a foreigner. Beijing requires that you’ve paid Beijing social security taxes for 5 years if you don’t have hukou, which equally applies to non-Beijing Chinese.
I believe those days are long gone. I once opened an Alipay and WeChat account without bonding my bank card to it. Eventually, I couldn't use them unless I bonded my account.
All large mobile providers have offerings targeted specifically at foreigners (e.g. https://www.mychinaunicom.com/) and getting a Chinese SIM is one of the first things to do for exchange students in China.
Maybe those are all registered on a random citizen's ID, but given the scale and visibility of that business, it seems unlikely that all of that is happening in violation of the registration requirements.
I had zero trouble getting a SIM with China Mobile. I pre-paid $1/RMB per day plus a deposit in case I went over my daily usage. It took a bit of time that day because of language issues but I was fine.
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 :)
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.
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.
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.
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.
>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
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?
>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.
That's the same OOM as what one might expect from a traditional payment card processor (although I don't think it's ever a flat fee, but that's less relevant in the context of transactions that would otherwise be in cash, presumably low-value ones).
I'm not sure if that's someone who's a well-known follower of Bitcoin costs or just a random person who tweeted. I'm willing to take your word for it, however, without a source.
> There are no "middlemen" required to transfer bitcoin via layer 2.
If that's the case, why is the transaction cost greater than zero?
I'm not the least bit familiar with "layer 2". If it's well-understood enough that it's just as trustworthy as the underlying currency, then it would make sense to use it. But, then, why would anyone ever use "layer 1" in the first place?
> "Middlemen" required to transfer bitcoin via layer 1 are miners and a peer (could be the miner) to relay a block to you.
Yes, the miners were the middlemen I was considering. Since they have to be paid, blockchains will never have free (gratis) transactions.
"Satoshi accumulated about 1 million bitcoins, 1/21 of the total coin supply, many of them are sitting on public keys due to this early feature. This one million Bitcoin is poised to be stolen within 5 to 15 years. Or even sooner, depending on, if secret government projects are still a thing."
At price of $6K/BC, there seems to be $ 6 Billion incentive to build that quantum computer to hack his pirate key.
If/when that happens, it will be interesting to see what will happen for the rest of crypto base eco-systems.
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
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... . 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?
If it's a global currency, it would also need to solve the Euro's problem: When every country uses the same currency, how can the individual countries enforce individual fiscal policies? If the answer is "not at all", what substitutes for fiscal policy?
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.
Me neither, opening a bank account takes one hour, costs less than one dollar, you get the bank card the same day, and there are no monthly fees (for debit card). The only case where it could be difficult is for people without ID (ie second child that were hidden back when the one-child policy was still enforced)
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.
It's a bit more complicated than that: you can link WeChat to some credit cards, or get money transferred to your account. However, it's difficult to impossible to do this outside China and/or without a Chinese mobile number.
Here in Australia, WeChat/Alipay are starting to proliferate in Chinese shops & restaurants, but it's impossible to join either locally. No shop that I know of will reject cash, but "cash or WeChat/Alipay only" is fairly common.
> In many cities, cashlessness is so common that panhandlers and street musicians use WeChat and Alipay QR codes to ask for change. But these anecdotal cases obscure some of the class-related issues that cashlessness can’t fix, and may worsen. The 2017 World Bank Global Findex database, which measures financial inclusion, estimated that some 200 million Chinese rural citizens remain unbanked, or outside of the formal financial system. Cashless payment systems by design require formal enrollment in banks, which are then tied to the mobile payment platforms that WeChat and Alibaba host.
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.
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.
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.
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?
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.
It might be uniquely Scandinavian if that was seen by government as a concern rather than an advantage. It isn't clear if this is what the gp is saying though.
I know the governments in India/China/US don’t like black money. After a certain point, an organization gets so big that it’s more profitable for those at the top to make sure everything is accounted for rather than letting all the little minions take their cut.
It would be beneficial for all of society if everything was accounted for, but only if everything was completely transparent, so that everyone can see what everyone is doing to hold each other accountable. Right now, we’re heading towards the worst system. The ones with the guns and bombs (power) get to see what all the masses are doing, but the masses don’t get to see what they are doing.
> I know the governments in India/China/US don’t like black money.
for 99% Chinese, as of writing, the Chinese government doesn't care what they are doing when it comes to personal tax. the fundamental difference here is that 90% of the tax collected by the Chinese governments are from companies, personal tax including those doing family business only counts for a very small %. that is the exact reason why small business vendors all started accepting mobile payment - they know full well that there is no tax risk for doing that.
things only become different when you are the big fish in the pond - if you only have a few million $ worth of black money, the safest place to keep it is your local branch of the biggest state owned bank.
SO there is no risk right now. But what happens if I make the wrong person mad? Now there's a trail of cash that I haven't paid tax on, and they've got me.
It just seems like a way to bake possible governmental control into an uncontrollable system like black money.
>that is the exact reason why small business vendors all started accepting mobile payment - they know full well that there is no tax risk for doing that.
Your statement. I understand that to avoid getting caught for breaking the law, don't break the law.
But this conversation was in the context of black markets and their 'no risk' existence at the good graces of the Chinese government.
What you call 'no risk' is actually just hard-coded blackmail from the government, I believe.
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.
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.
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.
In USA debit cards are a common way to receive benefits, but there's no bank account attached. A bank account wouldn't add much though, except perhaps a persistent long-lived account number which might be useful.
I recently attempted to buy dinner at my brother's wedding (in the middle of the USA) from a food truck. I was unable to because they only accepted transactions from corporate people on behalf of actual people (credit cards). They would not accept any form of payment (or even let you order) if you were just an actual human.
Not accepting cash is a form of economic racism. And it's slowly creating sunset towns where normal people trying to transact with other people aren't allowed. You have to have a corporation vouch for you.
On the other hand, you can almost get by in the USA without any cash at all. Ever since I’ve returned from China to the stares, I’ve been to an ATM twice.
I went to Sweden this summer and there were quite a few shops (including restaurants in the airport) that were "Card or Swish only", and one bar I went to was Swish-only. Swish is a local mobile payment system tied to Swedish bank accounts.
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.
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.
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.
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.
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".
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.