The pandemic has transformed the way the world does business, shifting consumer behaviour and rewriting the rules of retail. The environment we’ve been living in for the past year created behavioural and technological changes that affected every economic sector and industry, and the world of payments was no exception.
Although it is true that the pandemic accelerated the move towards contactless and digital payments, the use of cash in transaction was already declining. According to a recent report by the Gapgemini Research Institute, global non-cash transactions in 2019 grew by more than 14% to reach 708.5 billion, the highest growth rate recorded in the last decade.
Although not entirely defined yet, there is a new norm, and many of the world’s most powerful economies are positioning themselves for the end of cash, with China leading the way.
Advances in technology and an appealing value proposition
China has always been a top innovator in digital payments with Chinese fintech firms working hand in hand with big e-Commerce and tech players like Alibaba (Alipay) and Tencent (WeChat Pay) to make digital payments accessible to millions of users, even in the most rural parts of China. Alipay and WeChat also pioneered the use of QR code technology to make proximity mobile payments fast, secure, and convenient, and leveraged the use of e-wallets to create a powerful digital ecosystem for merchants and customers that goes beyond payments and touches upon every aspect of people’s daily lives. Therefore, it didn’t come as a surprise when China moved to the next level to introduce its own digital currency.
Rolling out digital currency
In April 2021, China started issuing digital currency to its citizens, making it the world’s first major economy to introduce a blockchain version of its own currency, taking a decisive step towards becoming a cashless society. Just like the benefits of mobile payments, block-chain powered digital currency offers many advantages such as trust, transparency, security, and reliability of data processing. Since April, over 100,000 people in China have tested the new digital currency through the Bank of China’s official app, allowing them to pay with digital yuan at selected merchants including big brands like Starbucks and McDonald’s. The Chinese’s government plans to keep bills and coins circulating for a while but will eventually digitize all its money. The Bank of China will also control the digital yuan to reduce volatility and wants to position it for international use, making it a strong competitor for the U.S. dollar.
What this means for the rest of the world
In China, an increasing number of merchants do not accept cash which explains why e-wallets like Alipay and WeChat Pay are so popular. Canada and countries like Australia, the U.K., and Europe, had already started embracing digital payments before the pandemic, and the U.S., who were reluctant to convert, discovered the benefits of proximity mobile payments during the last year, and are now accelerating the change in their own consumer market. Even if China is a step ahead because of digital payments playing such an important role in people’s lives, the massive amount of innovation that took place worldwide during the pandemic and the speed, security, and convenience of non-cash payment options will lead other countries to follow in China’s footsteps.
OTT Pay is one of Canada’s leading fintech firms and prime payment partner for every merchant looking to connect with Chinese consumers here and abroad. Not only do we offer reliable digital payment products and solutions, but our unique position as a Canadian company with strong roots in China allows us to accurately understand the Chinese consumer market and anticipate trends and shifts such as the use of digital currency. We also support the most popular Chinese mobile payments options Alipay and WeChat Pay, as well as Visa and Mastercard. Call our Customer Support Team at 1-800-688-9838 or email us at firstname.lastname@example.org to find out more.