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China’s central bank has issued new guidance asking merchants to display a standardised "cash accepted" sign, as concerns grow that certain groups are facing financial exclusion in China’s cashless economy.
In a rare move, the People’s Bank of China (PBOC) has written directly to merchants asking them to prioritise cash acceptance and to bear in mind that cash is still legal tender.
To this end, the PBOC has created a new sign denoting that cash payments are accepted, and has encouraged merchants to “voluntarily” place it in their shop fronts.
“Posting this sign will help the whole society to jointly create a convenient cash payment environment, making it easier for the elderly, foreigners in China and other groups to use cash payment methods,” said the PBOC.
The PBOC also reminded merchants that under Article 16 of the Law of the People's Bank of China, renminbi (RMB) in any form, including cash, is considered legal tender.
Merchants should therefore equip themselves to accept cash payments by having appropriate cash management and collection procedures in place, it said.
They should also prepare adequate change and should “not refuse to accept cash or treat cash payments differently without justifiable reasons”.
Zennon Kapron, founder and director of payments consultancy Kapronasia, said the guidance is a reminder that the PBOC is “not entirely comfortable” with China’s rapid shift towards a cashless society.
However, although the PBOC's statement emphasises the importance of cash acceptance, it remains to be seen how effectively this guidance will be enforced.
“Many merchants have already adapted to cashless operations, and reversing this trend may prove challenging, particularly as the directive lacks strong enforcement measures,” said Kapron.
The PBOC's stance on cash acceptance highlights the “delicate balance” between promoting innovation in digital payments and ensuring financial inclusion for all segments of society, Kapron added.
“As China continues to navigate this transition, it will be crucial for the central bank to work closely with merchants and payment providers to find solutions that accommodate the needs of all users.”
Helping the underserved
Over the past few months, China’s regulators have increasingly drawn attention to the need to improve payment services for underserved groups such as the elderly and foreign visitors.
As covered by Vixio, optimising cash acceptance is one of the six “main tasks” for banks and payment service providers (PSPs) to focus on in 2024, as per a State Council directive published in February this year.
Both the elderly and foreign visitors are affected by lack of access to cash, but the State Council also acknowledged that this problem primarily affects the elderly.
In contrast, foreigners' preferred means of payment is the credit or debit card, whose acceptance in China continues to be relatively poor by international standards.
In the State Council’s directive, increasing the quantity and quality of ATMs and card terminals among Chinese merchants was listed as an objective for the payments industry.
Nonetheless, in the early days following the directive, the State Council and other regulators appeared to have pinned their hopes on adapting China’s mobile payments apps so that foreigners can "pay like a local".
In a new payments guide for foreigners published by the Payment and Clearing Association of China (PCAC), visitors are encouraged to download either Alipay or WeChat and bind an international credit or debit card to their account.
If the card binding is successful, this allows foreigners to pay by card anywhere that Alipay or WeChat Pay QR code payments are accepted (online and offline), which is virtually everywhere in China.
