China's march to a cashless society has been spectacular and relentless (Cash is king? Not in China; Aug 22)
The drivers behind China's progression to a cashless society have not been the government, its central bank or state-owned commercial banks.
Rather, the push came from ambitious and forward-thinking private enterprises, in particular, the Alibaba Group and Tencent, the creators of Alipay and Wechat Pay, respectively.
Alipay was introduced in 2004 to handle payments on Taobao, but it became so successful that other companies outside of the Alibaba ecosystem adopted it to handle their payments.
Subsequently, Alibaba introduced the Yu'e Bao money-market fund, which allowed account holders to earn a higher interest rate on their deposits than their bank account deposit rates.
This move, in turn, drew even more people to set up Alipay accounts.
As for Tencent, the company leveraged on its popular messaging app (Wechat) to introduce its digital payment system.
Besides using their accounts to make payments, Wechat account holders could also store their savings in their accounts to earn better interest rates for their savings than from banks.
China did not evolve into a cashless society just for the sake of becoming cashless.
Innovative and ambitious private enterprises paved the way and lured users through a well-thought-out strategy and by dishing out attractive incentives for people to go cashless.
Chan Yeow Chuan