How slowing down the cashless frenzy could ensure a more inclusive society in East Asia

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Yunzhong Cheng, Strategic Partnership Lead, Asia , World Economic Forum


  • In Asia, South Korea is the cashless champion, while Japan remains loyal to cash.
  • Elderly, rural and low-income groups lack the digital communications equipment, network access, and digital-finance knowledge to enjoy a cashless society.
  • Cashlessness has multiple advantages but cash still lends people a sense of security.

Cash-free payment methods have become life-changing for many in the era of the Fourth Industrial Revolution. However, people around the world disagree on what the superior method of payment is, and it seems to be a subjective thing. In East Asia, there are also distinct national trends.

South Korea has typically been seen as the cashless champion of Asia. According to research, only 14% of payments in South Korea involve cash. Some might say that it is already a cashless society, and the main reason it has happened is that South Koreans want it.

The country has an almost 100% smartphone adoption rate, and there is a growing demand from the younger generation, looking for fast and convenient payment methods. And during the pandemic, South Koreans have become more familiar than ever with digital payments due to the boom in the e-commerce industry, with mobile shopping accounting for over 70% of online sales, The Korea Herald reports.

Even before the pandemic, cash was in decline. Businesses in South Korea are looking into virtual cards and prepaid cards, and the country has passed one of the world’s first comprehensive cryptocurrency laws.

Meanwhile in China, around 60% of payments are cashless, so 40% of payments still involve cash. The only reason the country is not higher in the ranking is its immense population. However, China is rapidly becoming one of the most cashless societies in the world, with the rise of dominant fintech platforms.

China is the undisputed leader of e-commerce in the region, and around 52.1% of the country’s retail sales will come from e-commerce in 2021. It is a mobile-first country, and mobile payments using QR code scanning have been successfully adopted by mainstream society, from big cities to more rural areas.

According to J.P.Morgan, sales via mobile devices take a 60% share of the overall e-commerce market.

Japan’s loyalty to cash

Japan has long been known for its heavy use of cash. Around 82% of payments involve its use, and whilst the pandemic has encouraged the cash-loving Japanese to move away from physical money, the country’s fast-ageing population are resisting change.

According to Reuters, Japan’s currency in circulation and bank deposits even rose at a record pace during the pandemic, which prompted businesses and households to continue hoarding cash. That proportion rises with the elderly, some of whom stick to cash as a way to prevent wasteful spending.

Excessive “cashlessness” will lead to a new type of financial exclusion which deviates from the original intention of inclusive finance.—Yunzhong Cheng

On the whole, Japanese society is still more dependent on cash, also largely due to the frequent occurrence of natural disasters. However, the government has set a goal of increasing cashless payments to about 40% of all transactions by 2025, from about 20% currently.

Is a cashless society an inclusive one?

People’s demand for cash is still widespread across Asia, especially from the perspective of inclusive finance and consumer protection. For instance, in many cities across China, it has become increasingly difficult to hail and pay for a taxi, buy groceries, or even settle a bill without mobile payments. If you walk into small stores, it is very possible some will not even accept cash. In South Korea, more than half of 1,600 bank branches no longer accept cash deposits or withdrawals.

Cash payments as a share of all payments in selected countries Image: Statista

The original intention of developing inclusive finance is to ensure that all individuals and businesses have equal access to useful and affordable financial products and services that meet their needs.

Digital technology improves the coverage of financial services, but it also brings “digital divide”. Some of the elderly, rural population, and low-income groups lack digital communications equipment and network access, not to mention digital finance knowledge and skills.

Cash is also the necessary guarantee to meet the basic payment needs of specific groups, including overseas tourists, juveniles and the visually impaired. Excessive “cashlessness” will lead to a new type of financial exclusion which deviates from the original intention of inclusive finance.

Cash as a secure solution

On the other hand, in the process of rapidly developing mobile payments, there is a tendency to over collect consumers’ personal information, which may lead to the over mining of consumers’ contact information, consumption behaviours, biometrics and other data.

Cyber security issues are also causing wide concern. For example, 7-Eleven Japan’s team opened up a “7pay” mobile app for making in-store payments in 2019. But unfortunately, $500K was stolen from the app due to insufficient mobile payment security, and the service was shut down in its entirety in less than three months.

When consumers are not sure about the security of mobile payments, choosing to use cash helps to reduce the risk of personal information and property security being violated.

Theoretically, cash can be regarded as a risk-free payment instrument and safe asset, while any cash-free payment instrument that depends on market institutions has more or less operational risk, market risk, credit risk, and even moral risk. As such, the option of keeping cash can enhance people’s sense of security.

Although there is some competition between cash-free paying and the use of cash, they are ultimately complementary in nature, not substitute. Becoming a cashless society should be a gradual process. It is important to make sure that no one is left behind.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

INTERVIEW: UN’s top official in North Korea foresees ‘surge’ in humanitarian aid

Marco Polo’s Dream

Trump ‘used’ G20 to side with Putin and split climate and trade packs

Privatisation and public health: a question of Human Rights

One Day in Beijing

What does global health translate into?

Nearly a third of the globe is now on Facebook – chart of the day

This incredibly detailed map of Africa could help aid and development

Resolving banks with depositors’ money?

How the gig economy can transform farms in the developing world

Coronavirus: First case confirmed in Gulf region, more than 6,000 worldwide

Long live Eurozone’s bank supervisor down with the EU budget supremo

What is a CSO and does every company need one?

‘Young people care about peace’: UN Youth Envoy delivers key message to Security Council

The Bank of China at European Business Summit 2015

Sign language protects ‘linguistic identity and cultural diversity’ of all users, says UN chief

Afghanistan: Bring ‘architects’ of latest ‘appalling’ suicide bombing to justice, says deputy UN mission chief

Do the EU policies on agro-food smell?

The Chinese solar panels suddenly became too cheap for Europe

The US banks drive the developing world to a catastrophe

Statement by Executive Vice-President Margrethe Vestager on State aid measures to address the economic impact of COVID-19

‘Bicycle Kingdom’ makes a comeback, as China seeks solutions to tackle air pollution crisis

Using CO2 as an industrial feedstock could change the world. Here’s how

This new solar technology can be printed or woven into fabric

Tsipras bewildered with Berlin’s humiliating demands; ECB expects political sign to refinance the Greek banks

10 ways cities are tackling the global affordable housing crisis

UN ‘prioritizing needs’, ramping up aid, as Hurricane Dorian continues to batter the Bahamas

EU-wide survey shows Europeans support the Conference on the Future of Europe

Pedro Sánchez: We must protect Europe, so Europe can protect its citizens

4 ways to build resilience to digital risks in the COVID-19 era

Abu Dhabi is investing $250 million in tech start-ups

Countries must rethink tariffs on bio-manufacturing

Plastic is a global problem. It’s also a global opportunity

“Prevention is better than cure”: the main goal of modern medicine

EU food watchdog: more transparency, better risk prevention

Global climate change: consequences for human health in Brazilian cities

Mobile Technology saving lives: changing healthcare systems with simple technology solutions

UN agency chiefs condemn Saudi-coalition led air strike that killed dozens in western Yemen

The cost of healthcare is rising in ASEAN. How can nations get the most for their money?

Activist Greta Thunberg gets preview of UNHQ ahead of climate summit

No better year for the EU’s weak chain links

Here’s how to rebut the climate doom-mongers

Understanding our own garden that we call mind

Cameron postpones speech in Holland

Cultural Intelligence: the importance of changing perspectives

European Parliament approves more transparency and efficiency in its internal rules

Wolfgang Schäuble: “Without European unification, there would be no German unity”

Economy and living standards of Gaza ‘eviscerated’ by crippling blockade – UN trade and development report

Guinea-Bissau needs ‘genuinely free and fair elections’ to break cycle of instability

COVID-19: EU co-finances the delivery of more protective equipment to China

Portugal wants its emigrants back – so it’s paying them to return

Team Europe increased Official Development Assistance to €66.8 billion as the world’s leading donor in 2020

Livelihoods of millions in East and Southeast Asia at risk from Swine Fever epidemic

Humanity ‘at a crossroads’ as damage to planet poses growing risk to health, UN environment agency warns

The secret weapon in the fight for sustainability? The humble barcode

11 ways to align global economic governance with green new deal

Illegal fishing: EU lifts Taiwan’s yellow card following reforms

Technological innovation can bolster trust and security at international borders. Here’s how

Financing fossil fuels risks a repeat of the 2008 crash. Here’s why

Real EU unemployment rate at 10.2%+4.1%+4.7%: Eurostat Update

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s