China inches a step closer to cashless society with two private banks ending services for banknotes and coins
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China inches a step closer to a cashless society with private banks ending services for banknotes and coins. The two regional banks namely Zhongguancun Bank in Beijing and the NewUp Bank of Liaoning from the northeast province of Liaoning will stop cash services. 

Zhongguancun Bank will stop cash services which include over-the-counter deposits and withdrawals as well as cash services on ATM machines from April. The NewUp Bank of Liaoning will stop its cash services from March. 

This just goes to show China’s inclination towards digital banking. China has a huge presence of digital payment apps such as Tencent Holdings’ WeChat Pay and Alibaba Group Holding’s Alipay. There is a nationwide pilot scheme running for the country’s digital fiat money, known as e-yuan. Already more than 261 people have downloaded the wallet app for e-yuan. 

Chinese businesses have expanded the use of digital yuan during the Lunar New Year holiday. With many digital payments accommodating the currency such as Tencent, WeChat Pay, and many more now support e-yuan payments for purchases made in its online stores.

Meituan, China’s leading on-demand services provider allowed more than 200 types of offline merchants, this includes restaurants, grocery stores, cinemas, and hotels – to accept payments in digital yuan.

With the country’s central bank repeatedly reminding ordinary merchants to accept banknotes and coins, the suspension of cash services at banks raises questions. 

According to the NewUp Bank of Liaoning, a private lender since its launch in 2017, the decision to stop cash services received permission from the central bank.

Zhongguancun Bank started in 2017, said its decision to ditch cash was to “accelerate digitization and continue expanding the development of its online services”.

The private banking sector in China is currently facing revenue pressure and more government scrutiny, after eight years since they were introduced. Some of these banks are hoping to be labeled as “internet banks”, but with the multiple regulatory challenges and the crackdown on the internet sector last year, things are not gonna be easy. To date only four banks have managed to gain approval to conduct cross-regional banking services on the internet.

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