Tag: cashless

China hands out $1.5m of digital currency in cashless society trial

  • Authorities in Shenzhen, southern China, have handed out $1.5 million of a new digital currency as part of a trial of a cashless society.
  • Last Friday authorities gave 50,000 lottery winners the equivalent of $30 each to spend digitally by October 16, the state-run China Daily reported Monday.
  • The digital currency is not like a cryptocurrency, and is issued and controlled by China’s central bank, the People’s Bank of China.
  • The PBoC said it plans to formally launch the digital payment system in late 2020, according to the BBC.
  • Visit Business Insider’s homepage for more stories.

A Chinese city has handed out 10 million yuan, or $1.5 million, in digital currency to trial what citizens would do in a cashless society.

On Friday, 50,000 people living in the Luhou district of Shenzhen were given digital “red envelopes,” each containing around 200 yuan ($30) worth of the digital currency, the state-run China Daily reported Monday.

The digital currency not a cryptocurrency, like bitcoin or ethereum, but a digitized version of the country’s renminbi currency that is run by China’s central bank, the People’s Bank of China.

The country’s four largest state-owned banks are taking part in the Shenzhen trial, China Daily reported.

The trial requires people to download the government’s digital currency app and spend their money between October 12 and October 16 in 3,000 participating stores in the district, CNBC and China Daily reported. One of those participating stores is Walmart, CNBC reported, citing the Shenzhen government.

FILE PHOTO:  A woman wearing a mask walks past the headquarters of the People's Bank of China, the central bank, in Beijing, China, as the country is hit by an outbreak of the new coronavirus, February 3, 2020. REUTERS/Jason Lee/File Photo/File Photo

A pedestrian walks past the headquarters of the People’s Bank of China in Beijing on February 3, 2020. The PBoC is in charge of issuing the digital currency.

Reuters


So far, around 113,300 such digital currency apps — or “digital currency wallets” — have been set up in various pilot programs across China, with more than 1.1 billion yuan ($163 million) of transactions carried out so far, Fan Yifei, the PBoC’s deputy governor, told China Daily.

The Shenzhen pilot scheme appears to be the country’s largest so far, according to CNBC. Shenzhen is China’s tech hub, and home to companies like Tencent and Huawei.

According to The Guardian, some 2 million people in Luhou had applied to be part of the trial before 50,000 were selected.

The PBoC said it will formally launch the digital currency late this year, the BBC reported, but is yet to confirm a date.

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A Chinese city is handing out $1.5 million in digital ‘red envelopes’ to lottery winners to trial a cashless society



a view of a city with tall buildings in the background: Futian district in Shenzhen, China. A different district, Luhou, took part in the digital currency pilot. Prisma by Dukas/Universal Images Group via Getty Images


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Futian district in Shenzhen, China. A different district, Luhou, took part in the digital currency pilot. Prisma by Dukas/Universal Images Group via Getty Images

  • Authorities in Shenzhen, southern China, have handed out $1.5 million of a new digital currency as part of a trial of a cashless society.
  • Last Friday authorities gave 50,000 lottery winners the equivalent of $30 each to spend digitally by October 16, the state-run China Daily reported Monday.
  • The digital currency is not like a cryptocurrency, and is issued and controlled by China’s central bank, the People’s Bank of China.
  • The PBoC said it plans to formally launch the digital payment system in late 2020, according to the BBC.
  • Visit Business Insider’s homepage for more stories.

A Chinese city has handed out 10 million yuan, or $1.5 million, in digital currency to trial what citizens would do in a cashless society.

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On Friday, 50,000 people living in the Luhou district of Shenzhen were given digital “red envelopes,” each containing around 200 yuan ($30) worth of the digital currency, the state-run China Daily reported Monday.

The digital currency not a cryptocurrency, like bitcoin or ethereum, but a digitized version of the country’s renminbi currency that is run by China’s central bank, the People’s Bank of China.

The country’s four largest state-owned banks are taking part in the Shenzhen trial, China Daily reported.

The trial requires people to download the government’s digital currency app and spend their money between October 12 and October 16 in 3,000 participating stores in the district, CNBC and China Daily reported. One of those participating stores is Walmart, CNBC reported, citing the Shenzhen government.



a statue in front of a building: A pedestrian walks past the headquarters of the People's Bank of China in Beijing on February 3, 2020. The PBoC is in charge of issuing the digital currency. Reuters


© Reuters
A pedestrian walks past the headquarters of the People’s Bank of China in Beijing on February 3, 2020. The PBoC is in charge of issuing the digital currency. Reuters

So far, around 113,300 such digital currency apps — or “digital currency wallets” — have been set up in various pilot programs across China, with more than 1.1 billion yuan ($163 million) of transactions carried out so far, Fan Yifei, the PBoC’s deputy governor, told China Daily.

The Shenzhen pilot scheme appears to be the country’s largest so far, according to CNBC. Shenzhen is China’s tech hub, and home to companies like Tencent and Huawei.

According to The Guardian, some 2 million people in Luhou had applied to be part of the trial before 50,000 were selected.

The PBoC said it will formally launch the digital currency late this year, the BBC reported, but is yet to confirm a date.

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Will Italy’s Push For A Cashless Society Change Its Economy Forever?

The coronavirus pandemic has left Italy’s economy in a bad state, with the latest predictions foreseeing a -9% in GDP in 2020. At the same time, the online economy has limited the fall, leading to a +15% in the use of contactless payments and +80% of mobile payments compared to 2019. For the first time, Italy’s historic resistance to electronic transactions might be at a turning point. This is one of the reasons behind the country’s government decision to draft a plan in the direction of a ‘cashless society’, which is also meant to counter undeclared economic activity and tax evasion – a phenomenon that in Italy is worth 12% of the country’s GDP.

Even before the pandemic, Italy was not in good shape: it is at the 24th place out of 27 countries in the EU for number of digital payments, while about 80% of all transactions are still made in cash. Now, COVID-19 has provided a big push in the direction of an enhanced use of electronic money, also because it allows no contact with objects (currently for payments up to €25 ($29) there is no need to insert a pin code) and is therefore perceived as safer. 

While consumptions levels in the country have generally decreased in the first semester of 2020 (-27% in April, now recovering by 0.8% increase in August), at the same time the number of digital payments has boomed, reaching €31.4 billion ($37 billion) with contactless cards and €1.3 billion ($1.5 billion) with smartphone payments, according to the Innovative Payments Observatory at Milan’s technical university Politecnico. In total, the volume of all card transactions in the country is worth €118.3 billion ($139 billion). 

In order to capitalize on these results and push more towards electronic payments, the Italian government is about to implement a series of measures: the first novelty, called ‘cashback’ will allow customers to be refunded of 10% of all payment card transactions, up to a maximum of €1,500 ($1,700) per person every semester and €3,000 ($3,500) a year, until 2022. There is also a ‘supercashback’ prize of €3,000 ($3,500) for 100,000 citizens who will have used e-payments the most. Moreover, starting from January 2021, customers and retailers using electronic money in physical stores will be allowed to participate in a lottery with prizes between €5,000 ($5,900) and €5 million ($5.9 million), for a total of €300 million ($354 million). 

“Sanctions alone cannot lead to a change in behavior, while now the effort is to try to find measures that allow both consumers and retailers to pay with a card”, said Ivano Asaro, director of the Innovative Payments Observatory.

According to a study by the Bank of Italy, the public cost to sustain the use of cash in the country is worth €15 billion ($17 billion), about 1% of GDP. This is why reducing use of paper money is essential in the government’s mind. Part of the strategy is also to

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Coronavirus USA: The move to a cashless society because of COVID-19 pandemic

Among many changes the COVID-19 pandemic has brought to the U.S., one is a possible move closer to a cashless society.

Since more people decided to stay home when the coronavirus outbreak spread, they were spending less money. If people were out, fear of catching the virus kept them from touching many things, including loose change at the register.

As Americans made more non-cash purchases, headlines of a coin shortage followed.

READ MORE: Millennial Money: Try touchless payment to avoid dirty money

“The coins aren’t getting to where they need to be,” said Harvard business professor Shelle Santana.

In 2018, non-cash transactions, including debit cards, credit cards, electronic payments and checks, totaled more than 174 billion. In 2015, that number was 30.5 billion less.

“It’s just faster,” Santana said. “It’s faster for the consumer and faster for the seller. So if your cashier isn’t having to count coins in particular, then the line can move that much faster.”

Unfortunately, a move to a cashless society could cause problems for some communities.

About 8% of Americans don’t have a checking account. About 18% of Americans rely on alternative banking solutions, like a check cashing location, even though they have a savings or checking account. So these people rely on cash to purchase goods and services.

“For people who have the option to do this substitution away from cash to credit cards, then you’re going to see that substitution occur over time,” said Santana. “But there are a number of people who don’t have the ability to do that substitution, and those are the vulnerable people in the community.”

While convenience is a perk for using a card or electronic payment, everything someone purchases is tracked and documented.

SEE ALSO: 2 ways to cut back on spending during COVID-19

“There is incredible visibility into everything that you’re spending on, and it also makes you vulnerable for potential data breaches or hacks into a system, and having your identity or credit card information stolen,” Santana said.

Cash, however, protects the user’s privacy and doesn’t leave a footprint behind. And the fine print on every U.S. dollar is an assurance cash won’t be going anywhere anytime soon.

“The legal tender in the United States is still cash,” Santana said. “Every single bill that is printed says, ‘This bill is good for all debts, public and private.’ And that’s our official currency.”

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