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

How women in developing countries can harness e-commerce

Climate change is forcing 20 million people a year from their homes, Oxfam says

Banks get trillions and the unemployed ECB’s love…

UN chief condemns terror attack in Kismayo, Somalia

Paradise islands of Pacific increasingly vulnerable to climate change, as UN boosts resilience

Having a baby during COVID-19 gave me new respect for the job ‘mom’


UN agency helps stranded Ethiopians return home, ending ‘harrowing migration ordeal’

Data show EU Economy in a stubbornly subdued state

Stronger partnerships with post-conflict countries needed to ensure ‘path towards durable peace’: UN chief

COVID-19: latest on evaluation and authorisation of vaccines

Europe is no longer an innovation leader. Here’s how it can get ahead

COVID-19 vaccines: MEPs quiz top officials on authorisation and contracts

Gender equality in STEM is possible. These countries prove it

Flexible jobs can make work-life balance worse, a German study finds

UN condemns deadly attack one of its vehicles

MEPs approve EU’s spending in 2017

Is Germany yielding to pressures for more relaxed economic policies?

Modernising EU justice systems: New package to speed up digitalisation of justice systems and boost training of justice professionals

The European Sting @ Mobile World Congress 2014, Creating What’s Next for the World. Can EU Policy follow?

Spring 2020 Economic Forecast: A deep and uneven recession, an uncertain recovery

These are the world’s most future-proof cities

Yemen: 11 more ‘terrible, senseless’ civilian deaths reported, following attack in Sana’a – top UN official

Cyber-Risk Assessments: the vaccine for companies in the Fourth Industrial Revolution

Boris Johnson’s no-deal Brexit to differ when issued from 10 Downing St.

Some truths about the coronavirus, according to the World Health Organization

Do not jeopardise future-oriented EU programmes, say EP’s budget negotiators

Asylum: MEPs call for more solidarity among EU member states

Business should be joyful – just ask the sports world

Kids who live in the countryside have better motor skills, a study in Finland has found

Women must have an equal share in politics, say MEPs and national MPs

Jeroen Dijsselbloem new Eurogroup president

70 years after the Universal Declaration of Human Rights, this is why we need dignity more than ever

GSMA announces first speakers for Mobile 360 Series-Middle East and North Africa

Business could learn plenty about cybersecurity from the secret state

A Sting Exclusive: “Stronger Cybersecurity for a safer EU against cybercrime and cyber threats”, by MEP Dalli

Economic recovery won’t tackle youth unemployment problem

These are the countries that have made their climate commitments law

Yellen and Draghi tell Trump and markets not to expedite the next crisis

More than 90 per cent of Africa migrants would make perilous Europe journey again, despite the risks

Central African Republic: UN chief hails signing of new peace agreement

What Keynes can teach us about government debt today

COVID-19 and its empathic social lessons

MEPs back first EU management plan for fish stocks in the Western Mediterranean

The costs of corruption: values, economic development under assault, trillions lost, says Guterres

Green economy ‘not to be feared, but an opportunity to be embraced’ says UN chief as COP25 gets underway

Vaccination: understanding the challenges surrounding COVID-19 vaccination campaigns

Commission approves emergency measures to protect eastern Baltic cod

Coronavirus: EU funding for the transport of medical goods, medical teams and patients

Importance of teaching ethics in Brazilian Medical Schools

New EU telecom rules: latest actions in time for transposition deadline

Why the fight against nature loss should be a business priority

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

Bosnia and Herzegovina: MEPs concerned by slow progress in EU-related reforms

CDNIFY @ TheNextWeb 2014

Global immunization is having its annual check-up. What can we learn?

Palliative care effectiveness at Universal Health Care: an eminent need

Women who crushed the gender barrier in medicine

Energy Union: EU invests a further €800 million in priority energy infrastructure

ITU Telecom World 2017 on 25-28 September in Busan, Republic of Korea

More Stings?

Speak your Mind Here

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

You are commenting using your 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