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Cashless Society in Asia and Each Countries’ Measures

DIGITAL VENTURES September 30, 2017 2:02 PM

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Previously, we shared about the development and examples of Cashless Society in Europe. It involved factors contributing to technology adaptation which includes culture, mindset, and the infrastructure. Today, let us take a look at the cashless society in Asia where traditions, culture, and basic mindsets are quite similar to Thailand. Also, we will update on the cashless system in Thailand and its current development.

Payment services in Asia have greatly advanced with technologies that support cashless society. In the previous year, consumers in the region carry less cash. A research revealed that half of the respondents from six Southeast Asia countries have more credit and debit cards in their wallets today than they did five years ago. Consumers begin to envision the possibilities of a cashless society in the countries where they live.

Singapore’s proactive support and contactless payment

Singapore is a good example of a successful cashless society. The Singaporean government has been proactively driving for a cashless society with the introduction of the Smart Nation initiative during late 2014. The Monetary Authority of Singapore launched the Smart Financial Center and allocated 225 million USD to develop FinTech. Moreover, LATTICE80 offered an ecosystem for FinTech startups to experiment and fully develop their work near the business district close to the stock market, financial institutions, and key monitoring departments in Singapore. An example of a daily cashless routine in Singapore involves public transportation payment. Top-up cards for public transportation in Singapore are contactless, meaning that they can top-up without having to insert cards into machines. During early 2017, Singapore began to allow users to use contactless credit or debit cards to pay for transportation such as buses, subways, or MRT without a top-up card. With the system, the payment will be included in the monthly card bill.

Contactless payment allows immediate payment upon the touch of mobile phones onto the NFC reader without needing to swipe a card. Singapore is equipped with this system ranging from Apple Pay, Samsung Pay and they are the first country in Asia to use Google Wallet on Android Pay. Moreover, Singapore offers The Association of Banks in Singapore’s PayNow, which is similar to Thailand’s PromptPay. The system allows transfers via mobile phone numbers or Singapore’s NRIC on the mobile and online banking system of participating banks. Within next year, this system is planned for payments with retailers as well as government-related transfers and payments. The scheme, much supported by the government, offers a variety of payments, easy and safe online shopping, as well as a tokenization system that can make payments without having to reveal account details. Singapore is quite advanced when compared to neighboring countries and is following Europe to become a cashless leader in the next 10 years.

India after banning banknotes to eradicate corruption and moving towards a cashless society

A significant incident regarding cashless society in India occurred on the evening of November 8, 2016. Narendra Modi, India’s Prime Minister, announced that 500 and 1,000 Rupee notes will be banned by midnight (accounting to 86% of all banknotes circulating the Indian cash economy). The cancellation or demonetization was part of a crackdown on corruption. That evening, people queued to withdraw cash from the ATM and rushed to stores to stock necessities. Vegetable stalls were sold out in 20 minutes.

Today, Indian stores begin to use the mobile wallet application by Paytm, the largest mobile payment company in India. The overall traffic increased 700% with 300% hike in the number of application downloads. The company plans for five million merchants to use the platform by March 2017. The company’s e-commerce system is supported by China.

Indian banks encourage online transactions via mobile applications. This growth is quite remarkable as the Indian smartphone market is second largest next to China. However, despite the significant increase in payment transactions, yet the figure is considered small when compared to Indian’s 1.25 billion population. More importantly, a majority of the population cannot access the technology and still prefer cash. This is an interesting case study regarding the time to adapt and the effort needed to create change.

China as mobile payment leader where everyone pays with smartphones

Ask your Chinese friend and you will learn that almost everyone uses smartphones to pay for everything. In restaurants, waiters will ask whether you’ll pay by WeChat or Alipay before asking for cash. There was a recent case that a Chinese lady, who was so heavily depended on mobile payment, realized that she forgot her card at the ATM machine 3 weeks ago only when the bank rang to remind her.

For tourists and business visitors who don’t own a Chinese bank account, it is quite difficult to change smartphones to wallets like the Chinese do. China needs to create a separate structure to deal with Facebook or Google that other countries still use as well as for other functioning credit cards. Also, China is driving Alibaba and Tencent into the international market. Below are some examples of how China is making mobile payment become a daily routine.

 

From the graph, we see that the Chinese population use mobile payments in several situations from dining, shopping in stores, entertainment, and tourism. These are the sectors with most mobile payments with other sectors following close behind. For the retail sector, convenient stores have the highest frequency of mobile payments at 68% followed by supermarkets (63%) and department stores (62%).

Cashless society in Thailand is on the right track

We see the efforts from both the public and private sector to drive cashless society in Thailand with e-payments. They try to provide users with easy access, convenience, speed, and confidence in electronic payment. In the past year, internet and mobile transactions greatly increased while transactions via ATM and at banks decrease. We begin to see banks moving towards the cashless society with programs as follow:

  • The Cashless society @ KU by SCB that provides university students with an SCB Smart ID Card. Together with the KU Application, students can enjoy convenient payments inside and outside the university.

  • QR CODE Payment allows users to scan QR codes and complete payments via the SCB Easy mobile banking application without having to carry small change. The program began with motorcycle taxis near the Chatuchak area together with the “Chatuchak Guide” application. SCB has plans to expand to other areas with new services such as to the Talad Rod Fai (Train Market), to purchase lotto, garlands, or items from vending machines.

It is quite an exciting time for cashless in Asia. Sectors such as banks and the government are involved which may be the drivers that make cashless society develop easier and faster, depending on the schemes in different countries. Although security is a highlighted concern each sector is seeking ways to create more credibility and access more users. Find out more at the DV Blog  Why Cashless Society?

Reference:

https://www.gtnews.com/articles/asian-corporates-join-drive-towards-a-cashless-society/

http://www.bbc.com/news/world-asia-india-38048051

https://www.nytimes.com/2017/07/16/business/china-cash-smartphone-payments.html?mcubz=1

http://technode.com/2017/08/15/the-rise-of-chinas-cashless-society-mobile-payment-trends-in-2017/