The transition to cashless economies faces hurdles
Semafor Signals
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Insights from South China Morning Post, The Economic Times, and Times of India
The News
Tourists in China have trouble making simple payments. An Indian lawmaker warned of “ticking time bombs.” Cuban small businesses are bracing for impact.
Countries have been transitioning to prioritize digital payments for years, and the move to “cashless” societies has some clear advantages. But the goal has run into hurdles globally.
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China has been largely cashless for years
As China tries to boost its tourism after lifting COVID-19 restrictions, tourists have reported having trouble making payments in a largely cash-free economy, where many locals use WeChat and AliPay for payments, the South China Morning Post reported this week. Last summer, those apps allowed users to connect their international credit cards for the first time, but foreigners still face restrictions for individual transactions and transfers or are wary about giving personal data to the apps. China’s central bank last week encouraged more banks, hotels, and restaurants to accept foreign cards, a sign that Beijing wants to encourage tourism to help its struggling economy.
Paytm collapse highlights India’s ‘adolescent’ fintech sector
India has also been a leader in the cashless transition; a government minister recently declared that India does as many cashless transactions in a month “as America does in three years.” But the rapid growth of the fintech sector has come with challenges: Last week the country’s central bank clamped down on the Indian digital payment platform Paytm, ordering it to stop accepting deposits at the end of the month. It prompted a lawmaker to warn of the risks of digital transactions, calling two other leading, foreign-backed payment platforms “ticking time bombs,” while a parliamentary panel pushed for more government support for domestic fintech players. The Paytm saga “has shown India’s world-leading fintech sector for the adolescent it is,” Bloomberg’s Menaka Doshi wrote. “Hungry for growth, but dismissive of process.”
Digital payments are becoming globalized in a boon to tourists
Tourists suffer in a cash-free world, The Telegraph’s travel correspondent argued last year. Credit cards can be declined or come with fees, and it’s not uncommon for phones to run out of battery while sightseeing. But platforms are increasingly allowing digital transactions to be standardized across borders — perhaps providing a glimpse into the future of a cashless world. This week, officials announced that India’s Unified Payments Interface — a free, digital payment platform that works with multiple fintech companies — can now be used to make payments in rupees in Sri Lanka and Mauritius, and at the Eiffel Tower. The move was seen as a benefit to Indian tourists who won’t have to worry about exchange rates or cash withdrawals.
