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).
MacauPass has partnered with CTM and now it’s possible to use NFC to pay phone bills, top off card, etc. Going in the right direction
Not a big fan of a cashless society personally, the last thing we need is for our ability to make payments restricted in any way.
A very nice article on a very interesting topic.
If only the authorities are forward thinking enough…Macau Pass has been around for ages, it’s unbelievable that one still cannot use it to pay for parking meters and MOST of the the car parks out there.
Macau being such a small but “financially capable” city is the perfect platform to be innovative and futuristic in terms of transport, payment, education, social benefits or just living in general.
Many would argue that tourists prefer cash over using their credit/debit cards back home because of ridiculous service charges and that local cash value store cards such as Octopus in Hong Kong is not as widely useful for tourists as for locals – as well as often the need of refunding the deposit for the card – thus discouraging their use.
Some destinations, the States for example, has preloaded and reloadable VISA cards where customers can buy and use these cards widely across town and even on the internet. The credit can be arranged in small amounts thus minimising the problem of losing the card or fraudulent use.
In my view, it is not always the government, but also how the bank and the local businesses operate. If banks lower their fees and businesses accept the fact that they have to pay service charges in lieu of the costs involving handling cash, and there are more protection towards the use of credit/debit cards and education to the local people and tourists coming in to Macau regarding the use of cashless systems, then I think it is workable here in Macau to reduce cash use.
I often feel curious why my bank would charge me $5 for ATM transfers across accounts in different banks, $30 on the internet doing the same thing but free if I take money from an ATM then physically deposit the money in another bank at the counter (note that many banks have huge queues at the counters and these are manned by paid staff). I also find it highly unreasonable that the HSBC bank is not linked up with the local banking system hence ATM nor internet banking would work unless you pay ridiculous service charges equivalent to transferring funds to an account overseas.
I also find it strange in today’s business environment that particular shops and retailers charge a minimum for credit/debit card use or a surcharge to cover their costs. Among many other things, these examples show how backward the industry is in operating their businesses.