China's Central Bank Prohibits Merchant Cash Rejection
2019-01-03 11:45 Thursday
Alibaba Group's Alipay and Tencent Holdings's WeChat Pay have become increasingly popular in China, and are now accepted for a diverse range of services, from public transport to retailers. Even many beggars in China have QR codes that allow donors to hand over cash via mobile payment. However, not everyone in China has participated in the mobile payment wave. The ease of accepting mobile payments has meant that some vendors, especially those in major cities like Beijing and Shanghai, have stopped accepting physical cash. This has created problems for the more than 30% of consumers aged 50 and up who have had cash payments rejected.
China's central bank warned that rejecting cash as a form of payment is illegal, and renminbi is still the legal tender in China. Merchants who reject cash will take direct hits to their credit scores. Rejection of cash could eventually cause a loss of confidence in physical money and is unfair to those not accustomed to electronic payments.
"Electronic payments have given us a new methods for payment, but they must not replace cash payments. It is particularly unfair to the elderly and people who livein underdeveloped parts of the country who would have difficulty mastering the electronic payment process", the People's Bank of China noted in a statement. "Over time, the practice can become second nature and people could lose confidence in cash.
The central bank also pointed out that some local authorities were promoting their technological achievements with taglines such as "cashless city", but this should not mean that they no longer accept cash.
China's central bank has issued warnings to 602 different retailers, instructing them to stop rejecting cash from customers. One of the retailers contacted was the Hema supermarket chain owned by Alibaba, which also owns Alipay, one of the largest mobile payments systems in China. Following the central bank's instructions, Hema stores have started accepting cash again.