Blog

A cashless society is defined as an economic state where financial transaction is not conducted using the physical form of money but rather through digital transfer of money. In practice, the usage of QR code or contactless payment replaces the physical exchange of money. 

Many countries have already extensively incorporated this new method of payment into day to day purchases. Take China for example, which is the closest model to being a cashless society. China has started moving towards becoming a cashless society in 2017. More than three-quarters of Chinese citizens were using digital payments rather than cash. The younger generation in China first started using digital payments, eventually influencing the elderly in the country to adopt similar practices. This has helped the Chinese government to bring the usage of digital payments into the mainstream quite quickly and thoroughly.

China has also banned the usage of services from contactless payment providers such as Visa and Mastercard. This initiative has helped China to boost its digital economic progression as well as created an opportunity for China to market its digital payment app to foreign visitors, as they have recently made it feasible for visitors to use. Not only have they incentivized the civilians to use their very own app for payment, they have also encouraged its use amongst tourists! Implementing this is no easy feat.

The usage of digital banking applications has drastically increased the purchasing power of the buyers when buying goods due to the shrinking gray economy, booming online commerce, and reduction in fraud. 

Furthermore, China has tried to become more inclusive when pursuing a digitized economy. This means that people in the lower rung of society will not feel left out even when the country prospers towards a fully digitized economy. This phenomenon can be seen where even beggars in China ask for donations through QR code payments. When everyone in a country is able to afford smartphones and have knowledge about digital banking, we might be able to infer that their government is doing well. This is possible in China as they produce their own smartphones at a cheap price, so everyone can afford a smartphone. 

This is the exact reason why Malaysia should learn from China and move towards a cashless society.  This could help Malaysia to boost our purchasing power as financial transactions are made easier. There is no longer any cash problem if every store in Malaysia accepts contactless payment. E-commerce platforms will become easier to use if everyone has the knowledge of digital banking. Monthly expenditure of an individual will also become more organized as every single purchase is recorded and analyzed. This could help encourage Malaysians to be more wise in their spending – a problem Malaysians have had difficulty overcoming. 

Is Malaysia ready for a cashless society? To a certain extent, no. Although efforts have been made by the Malaysian government to introduce a RM30 subsidy for Touch N Go eWallet, Boost, and GrabPay app users, this implementation of digital banking is not introduced thoroughly throughout the whole country. Firstly, those who will apply to get subsidies from the government are those who are already aware and have prior knowledge regarding digital banking. On the other hand, those in rural areas who have little knowledge about what digital banking continues to lag behind the cities in terms of development of technology. 

Disregarding the fact that smartphones are not universally owned by all citizens, those that live in rural areas would also face problems in adapting to these digital payment apps as most of the stores in the area do not yet accept e-payments.

We often hear of connection issues pertaining to e-wallet apps, particularly for Touch N Go. This often causes a huge trouble for customers who have turned towards e-wallets in order to avoid hassle. This is mainly because the top up booths are no longer working, and their E-wallets are not functioning as well. If problems like these arise even in big cities like Kuala Lumpur, this might be an indication that Malaysia is still far away from turning into a fully cashless society.

More effort should be introduced by the government to ensure that Malaysians are able to adapt to a cashless society. Rather than just subsidizing RM30 for e-wallet, investments should be made in creating more practical technology to facilitate digitisation. People in rural areas should also be included when new technology is introduced, such as by ensuring that smartphones are more affordable as they are almost inseparable from digital transactions.

It is pointless to go big about being cashless but at the same time ignore a huge portion of citizens in Malaysia. Cashless is the future, but the present needs to be fixed first.