Don't bank on cashless society coming soon

City talk | Susan Liang 30 Jul 2021

In Sweden, cash is no longer accepted.

Instead they use Swish, a mobile payment system.

This service was launched in 2012 by six of the country's large banks in cooperation with the Bankgirot clearing system and Sweden's central bank.

Germany has gone almost cashless, but for those who do not have smartphones or want to continue to use cash, a mobile bank goes round the countryside to provide them with cash services.

China's central bank has launched its digital currency, and anyone interested in this subject should buy this book called Cashless: China's Digital Currency Revolution by Richard Turrin, who had the unique experience of watching firsthand China embark on the road to fintech payments and digital currency.

The United States is completely behind on this technology, and countries like the EU, the United Kingdom, Japan and India are now developing their own digital currencies.

India was the first country to ban high-denomination banknotes overnight, causing panic and endless queues at banks as people raced to convert to smaller notes.

President Narendra Modi supposedly did this to stamp out corruption.

I heard that in Florida, big-denomination banknotes are sometimes used by the underworld to purchase apartments.

To stamp out crime, some people in government think that financial transactions should now be carried out electronically so there is a paper trail.

There is a body called Better Than Cash Alliance, which has 77 members committed to digital payments. They include governments from Africa, the Asia Pacific and Latin America and NGOs.

Its aim is to shift from cash to digital payments but in a responsible way.

There are pros and cons as to whether we should stop using cash. My own view is that there should be facilities for both forms of payments, otherwise governments and big payment providers will control your life.

Even though Alipay has more than 1.2 billion users globally, it is only a mobile and online payment platform and not as safe as a central bank.

I had a nasty experience with Master Card canceling my card just because I was downgraded from Premier to HSBC One. On receiving the notification, I cut my card into two and threw it away.

Then about a month later, I received my credit card reward, which I could not redeem at nominated partner merchants as I no longer had my card.

Merchants have to pay 2 to 3 percent of every transaction to the credit card companies, and smaller merchants are happy to give you a discount for cash.

So a cashless future may not be a good thing and can be a frightening prospect for older folks who may not have a bank account or know how to operate a smartphone.

However, I do support the Octopus Card, which is safe and convenient as it is just a stored value card that can be topped up at all MTR stations and convenience stores.

I do not yet have an Octopus Wallet, which has to be linked to a bank account or a credit card.

Recently the consumption voucher scheme was criticized by some sectors as too complicated and for not being paid in cash.

China probably launched its digital currency to protect its Belt and Road initiative from US sanctions so payments can be made in yuan without having money transfers in US dollars, which has to go through the Swift system.

Readers can see what damage US sanctions have done to Venezuela, Iran, North Korea and Cuba.

Susan Liang is a lawyer who likes to speak her mind on issues that concern the man on the street

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September 2021

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