Be­ware of temp­ta­tion in cash­less fu­ture

As the world starts to turn its back on pa­per money, one old golden rule still ap­plies — don’t spend it if you don’t have it

China Daily European Weekly - - Comment - Har­vey Mor­ris The au­thor is a se­nior ed­i­to­rial con­sul­tant for China Daily. Con­tact the writer at har­vey­mor­ris@gmail.com.

China in­vented pa­per money more than a mil­le­nium ago dur­ing the Tang Dy­nasty (618-907), and Chi­nese in­no­va­tors are now at the fore­front of tech­no­log­i­cal changes that could abol­ish cash for good.

With ban­knotes rapidly go­ing out of fash­ion in the elec­tronic age, China’s Ali­pay just made it even eas­ier for con­sumers to spend their money by rolling out fa­cial recog­ni­tion pay­ments.

In the first com­mer­cial ap­pli­ca­tion of the tech­nol­ogy at a fast food restau­rant in Hangzhou, cus­tomers can now set­tle the bill by hav­ing their face scanned by a so-called “Smile to Pay” ap­pli­ca­tion.

It took hun­dreds of years for the con­cept of pa­per money to spread from China to the rest of the world, but the mod­ern pace of tech­no­log­i­cal up­take means fa­cial recog­ni­tion pay­ments will not be con­fined to China for very long.

Just 50 years af­ter the world’s first cash dis­penser was in­stalled in sub­ur­ban Lon­don, sub­se­quent gen­er­a­tions have be­come ac­cus­tomed to dis­pens­ing with phys­i­cal money al­most en­tirely and us­ing their charge cards for ev­ery­thing.

Bar­clays, the Bri­tish high street bank that in­stalled the first ATM, now al­lows cus­tomers to trans­fer money ver­bally via a voice ap­pli­ca­tion on their cell­phones.

In the­ory, it doesn’t much mat­ter how we pay our bills, whether it is with gold coins, notes, elec­tronic trans­fers, cards, cowrie shells or even smiles. The es­sen­tial is that ev­ery­one has trust in the method of set­tle­ment.

Pa­per money only took off be­cause traders were con­fi­dent that they could safely de­posit their gold and sil­ver with China’s na­tional trea­sury in ex­change for ne­go­tiable promisory notes.

When the trav­eler Marco Polo de­scribed the use of pa­per money to his me­dieval con­tem­po­raries, no­body be­lieved him. It was to be cen­turies be­fore the con­cept was adopted in Europe.

Some of to­day’s older gen­er­a­tion are sim­i­larly re­sis­tant to change and are hor­ri­fied that one day cash may dis­ap­pear al­to­gether. Alarmed by tales of on­line scam­mers — the 21st cen­tury ver­sion of the pick­pocket — many older peo­ple are re­luc­tant to make pay­ments on­line.

They also be­lieve that the phys­i­cal act of tak­ing hard-earned cash out of your wal­let and see­ing it dis­ap­pear into the shop­keeper’s till makes it less likely you will make an im­pulse pur­chase with the sim­ple wave of your card or your cell­phone.

The ex­is­tence of easy credit in many coun­tries can also mean that con­sumers with a credit card burn­ing a hole in their pocket end up spend­ing money they don’t have.

Re­cent re­search in Malaysia in­di­cates that, while four out of 10 credit card hold­ers pay their debt in full ev­ery month, 10 per­cent fail to make the min­i­mum pay­ment of 5 per­cent of the out­stand­ing amount. So the method of pay­ment, it turns out, can af­fect spend­ing habits.

Oth­ers are con­cerned about leav­ing an elec­tronic trail of their ev­ery pur­chase, an in­vi­ta­tion to be pestered by mar­keters and ad­ver­tis­ers, and pre­fer the anonymity of old-fash­ioned hard cash.

The anonymity of cash can, how­ever, be ex­ploited by tax-avoiders and money-laun­der­ers. Gov­ern­ments and mon­e­tary au­thor­i­ties, there­fore, have an in­ter­est in the trend to­ward elec­tronic pay­ments that can be more ef­fec­tively mon­i­tored.

How­ever, with some re­tail­ers al­ready promis­ing — or should that be threat­en­ing? — to go com­pletely cash­less in years to come, re­cent re­search in the UK in­di­cated that such a move could mean them los­ing up to half their cus­tomers, par­tic­u­larly the older ones.

But, in the end, the even­tual trans­for­ma­tion to­ward a cash­less so­ci­ety now ap­pears in­evitable.

That said, the old rules that have gov­erned the use of money since it was first in­vented will re­main in force: Be­ware of thieves and fraud­sters, both in the real and vir­tual worlds; avoid im­pulse pur­chases of stuff you re­ally don’t need; and try not to spend money that you haven’t got.

In the end, the even­tual trans­for­ma­tion to­ward a cash­less so­ci­ety now ap­pears in­evitable.

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