CHINA CAME FROM nowhere to become a leader in cash-free purchasing, a top London professor said this week.
It is now on track to becoming the world’s top country for cash-free transactions, said Kent Matthews, professor of banking and finance at Cardiff University.
In China, the proportion of the total amount of money in circulation in the form of cash has dropped to 3.7 percent and is continuing to fall, Matthews told a Xinhua reporter.
That’s only slightly behind Britain, where cash is about 2.9 percent of the total money in circulation. But it took the colonial country decades half a century to reach that point, with credit cards first being widely distributed in the UK in the 1970s.
China started the journey much more recently, but has moved fast. And the world is gradually moving in that direction. “The trend towards a cashless society is inexorable,” he said.
The professor said he would not be surprised if, in the next five years, cash usage declines to less than two percent of the total money in circulation in China. “The adoption of technology in China is much more rapid.”
In some ways, China appears to be already ahead of much of the world, in the way that non-cash transactions can be made for very small purchases. Matthews said he visited China and used his phone to buy a mango from a street vendor for the equivalent of just a few pennies.
He told the Xinhua reporter he was amazed to see people who he’d expected to prefer using cash, such as the elderly, small shop owners, and street vendors, used their phones for transactions rather than cash.
In the west, some people have warned that digital cash is fine for the young, but not suitable for older people. “China is setting an example on digital payment to the rest of the world and is showing us that, in fact, age is not an impediment,” he said.
But he warned that theories that cash will disappear completely anywhere are false. “There will always be a need for cash, and it will be impossible for any government to legislate cash away,” he said.