Macau Matters | Cashless Macau?

Richard Whitfield

Richard Whitfield

I have just been reading that Sweden is likely to be the first country to totally eliminate cash in the form of coins and notes, and maybe this is a medium term goal we should consider for Macau?
I read on www.slashdot.org (an interesting online news website) that now notes and coins represent just 2% of Sweden’s economy, whereas they account for 7.7% of the US economy. Moreover, cash was only used for 20% of consumer payments in Sweden last year, whereas the global average is 75%. Eventually, the world will go cashless, so why not treat this as an opportunity instead of a threat.
Eliminating cash has several advantages. It can save governments significant amounts by eliminating the need to maintain an expensive inventory of notes and coins. It also makes corrupt payments much harder and makes it much more difficult for citizens to hide income to evade paying their taxes.
When I first started working with a Macau university it was accepting student tuition payments in cash, and an office girl was tasked with taking bags of cash to the bank each day (without a security escort). I quickly stopped this practice because it was dangerous for our office staff, and it was a very costly way of receiving payments. Many consumer businesses can get significant operating cost reductions by eliminating cash handling. Cash handling is a big operating headache for casinos, for instance – we have all seen the armoured cars going around town with their police escorts which all costs money.
Having a “cashless” economy would make the money laundering that is at the core of Macau’s casino economy significantly more difficult, but I am not convinced that it is in Macau’s best long term interests to continue to build its economy on such corrupt foundations.
There are concerns that being cashless can disadvantage the poor because they do not have access to financial services and financial charges would become a significant living expense for them. However, I believe that these issues can be managed – traditional banks are already facing disruption from start-up financial technology businesses because of their lower operating costs (which can go a long way to resolving the problems of going cashless). Implementing electronic payment systems have proven to be a boon in many places in the developing world – just look at the success of m-pesa in Africa, for instance, and the way that India is moving towards electronic deposits of social security payments.
Being cashless does not mean paying for everything by credit card, or paying exorbitant credit card fees. The Octopus card in Hong Kong is a good example of a convenient low cost, use anywhere debit card, for example, and for the life of me I do not understand why the MacauPass card is not used more widely. There are also several interesting new near field communications technologies where people can use their smart-phones for payments.
The Macau government keeps on talking about diversifying the economy and I keep on agreeing with them and suggesting avenues for development, and I think that cashless economy infrastructure is a good one. We just need a monetary authority in Macau that is forward thinking and willing to create a progressive and flexible legal framework to support growth in this area.
I also keep on saying that Macau can and should be a showcase for 21st century living. We want the tourists who come here to see the future of what their home towns could be like and to take these ideas home with them (so that their governments and institutions come to Macau to tap our expertise).

Categories Opinion