‘Coins of the realm’ losing their luster
Mobile payments industry looks set to consign those shiny silver pieces to the scrapheap of business
When was the last time you saw a yifen or a 1 cent coin? Probably years ago, as today they are rarer than giant pandas.
With limited value, shoppers simply gave up on China’s 1 cent (0.15 US cent) coin and consigned it to history.
Even the three Stateowned mints, including Shanghai Mint Co Ltd, are scaling back on low-denomination coins, including the tiny nickel pieces.
The reason for this is simple. The trend toward e-payments has made our pockets lighter and forced the country’s mints to focus on just producing 1 yuan coins.
“Demand remains high for them in China compared to other types, as people prefer to use them to buy subway tickets or stamps at vending machines,” said Cao Zhanlu, a manager at the Shanghai Mint.
“But production has still declined by around 500 million so far this year compared to 2016,” Cao added, declining to disclose the exact number minted or overall coin production.
New technology will eventually make these shiny silver pieces collectors’ items only.
Data from AliResearch showed that China’s mobile payment industry was worth $8.52 trillion last year. This was about 70 times higher than the US figure of $112 billion.
Online giants Alibaba Group Holding Ltd and Tencent Holdings Ltd have been driving down demand for coins in recent years as mobile payment expands from internet shopping to traditional stores.
At one time, summer used to be the peak season for people using coins to buy cheap products, such as ice cream or fruit. But even small venders now use QR codes for purchases.
“People just do not want to use coins as they can pay for nearly everything digitally. Even I do not take coins with me,” said Jin Lieqi, president of a branch office for ICBC, or Industrial and Commercial Bank of China, in Shanghai.
“There is only one place I believe will be immune from the e-payment method and that is temples. People drop coins into donation boxes for good luck,” Jin added. “It has symbolic meaning to put coins into a donation box, and I don’t think people are willing to scan QR codes instead. Not in the short term.”
Shanghai Mint has managed to fill the gap in production by rolling out commemorative coins, said Cao.
The trend for honoring people, places or events is increasing with the company signing up more designers and engravers as business expands.
“Shrinking demand for coins has not made a significant impact at State-owned mints,” Cao said.
But surplus coins have produced a headache for China’s banks.
They have increased the workload at local branches as they have to be counted and then sent to the vaults for collection.
“We have more coins than we need to meet demand,” said Jin, president of the ICBC Shanghai branch office. “Now, we put much effort dealing with coins that are just stacked in vaults.”
The bank sends out up to 350,000 coins to hospitals, subway stations and other common payment points in Shanghai every day.
But that amount has declined by between 5 percent to 10 percent so far this year compared to 2016.
“The bank brought new machines to deal with those coins, as all those returned need to be cleaned, resorted and repacked before being sent back to the central bank,” Jin said.