Education Frontlines
John Richard Schrock
China has gone cashless. Will the US follow suit?
In my recent two weeks speaking in China, the second most impressive change (following the county’s extensive shift to EVs) was the extent China has finally moved from paper money and coins to digital methods of payment. The use of cards or phone apps for payment is now the system for purchasing products or paying for services.
In China, Alipay and WeChat Pay are the two major apps used in most transactions, although at the larger commercial stores, my Visa card worked just as well. Many other international cards are likewise recognized. The national currency is the yuan or renminbi (RMB). I had a small amount of paper money left from my annual trips that ended in 2020 with the pandemic lockdown, and these I converted to digital format at a local bank.
China’s central banks require businesses to continue to accept paper money, but since I was in university cities, I saw no one use cash. My colleagues indicated that some of the rural elderly still used cash, and small street stalls might still lack digital payment ability. However, in 2015, I found that farm venders were coming to town with their harvested melons and other crops in small wagons, a QR code sign provided the information on price and they had a cellphone connection to take payment from customers’ cellphones.
In China, virtually all adult citizens, except the rural elderly, have had cellphones for the last two decades. Basic cellphones (not iPhones) are inexpensive, and China’s three major telecom businesses (China Mobile, China Telecom and China Unicom) charge dramatically less for service with a range of local to national cellphone plans so that the poorest of citizens can afford it. In the U.S., you cross over a rural hill and see three separate towers for three or more cellphone companies, and each tower paying monthly rent. China does not allow that type of wasteful practice. Thus, cellphone costs are dramatically lower while nationwide coverage is greater and cheaper.
While Western banking systems can be finicky about accepting varieties of digital currency, China promotes using a central bank digital currency for transferring digital payments. The digital yuan (e-CNY) is a form of electronic money and should not be confused with cryptocurrency that can hide the identities of participants and promotes anonymous transfers of criminal money.
The first country to switch to digital payment and mostly abandon paper money was Singapore. The Monetary Authority of Singapore led the way in going from various QR codes and payment apps to developing the Singapore Quick Response Code that made payment systems interoperable.
According to the International Monetary Fund, Sweden, Norway and South Korea are also becoming cashless, with Sweden likely to become totally cashless by the end of 2025. However, in Western countries, there is a higher risk of both online fraud and the exclusion of businesses and institutions that have not yet integrated with the online payment systems.
For both Asian and European cultures that were more sensitive to protecting others around them during the COVID-19 pandemic, the switch to food delivery and the concern with money hygiene both encouraged the use of contactless payments.
But how soon and how carefully will the U.S. move to more electronic payments and end cash? Digital payments remain inside banking systems that know the identity of the seller and buyer.
Digital payment systems do have the advantage of preserving the penny and preventing the wealthy from gaining the advantage of massive rounding up when the physical penny is gone. They likewise provide instant financial exchange.
But educationally, they are likely to further drive down the math skills of our future U.S. generations. We have seen the decrease in many students’ ability to add, subtract, multiply and divide as cellphone calculators took over those functions. Thus, fast food outlets put food pictures on their cash registers and let the new student employee hit the product and enter the $10 payment and tell him/her what change to give back. But now, some youngsters cannot even count the change!
If we move to a system where the register simply reads the card, will our next generation fully lose the ability to count? It is not a problem in Singapore, Sweden or China, where math education remains solid. But it will be here.