Credit cards popular, but age-old habits die hard

PHOTO: Credit cards popular, but age-old habits die hard

SINGAPORE - Office workers in Japan are loaded, literally, after pay day, their wallets bulging with wads of notes they have just withdrawn from the ATM.

The cash is for daily expenses, paying the rent, shopping and entertainment. For the married men, it is money to be handed over to their wives to run the household.

Japan may be one of the most developed economies in Asia, but the age-old habit of paying by cash remains prevalent and the country is far from becoming a fully cashless society.

Many people, especially the elderly, still sneer at credit cards.

"Many people see using credit cards as falling into debt. My parents are like that and don't own any cards," said 39-year-old office worker Ryoshi Kikukawa.

Others see nothing wrong with having the best of both worlds. When Mrs Izumi Kumano goes shopping, the 51-year-old carries a lot of cash in her wallet along with several credit cards.

"I use cards for huge purchases, and cash for small things and foodstuffs," said the housewife. "I avoid using a card when there is a queue at the cash register as it takes longer. I don't want to hold up other customers."

This lingering fondness for the convenience of cash - by both consumers and retailers alike - is one big reason holding back many Asian cities from becoming fully cashless.

Japanese establishments, for one, gladly accept cash payment of any amount unlike in, say, the United States where shops are reluctant to accept large bills and prefer payment by card for big purchases.

And whether you are in Taipei, Hong Kong, Beijing, Shanghai or Singapore, it is still far more common to see consumers use cash when making small purchases like eating at a fast-food outlet or taking a taxi.

In Taiwan, it is cash only at many cafes and restaurants, even the more upmarket ones. One probable reason is that in Taiwan, like in Japan, one does not have to walk far to find an ATM.

Concerns over the security of credit and online payments present another major hurdle in Asia's march towards a cashless economy.

For instance, in China, which has the world's largest population of online shoppers, many consumers still prefer to pay cash on delivery for their purchases ordered via the Internet.

This is particularly true in smaller cities where incidences of card fraud are higher, and where retailers run cash-only operations.

Ms Feng Xia, 27, a pharmacist from a small city in northern Liaoning province, said she "almost never uses a card".

She told The Sunday Times: "I don't keep much money on my bank card in the first place.

"Usually, I buy things from the local market where they don't take cards anyway."

That's not to say that Asia is not becoming more cashless, or that credit cards are not popular.

In fact, nearly nine in 10 adult Japanese own credit cards, a recent survey by the JCB credit card company showed. With 320 million such cards in circulation, it works out to about 3.5 cards per adult.

Also, 70.4 per cent of the Japanese use electronic money, if one includes cards for riding on trains and buses as well as those that can be used only for shopping.

But it is in China where the cashless economy has truly eye-popping potential.

The mainland currently has some 3.7 billion credit and debit cards in circulation. According to figures from China's central bank, average spending by Chinese consumers via credit cards rose 60 per cent to 4,900 yuan (S$1,000) in the first quarter of this year.

China also has the world's largest population of online shoppers, where nearly two in three of its 530 million netizens make purchases online.

According to Boston Consulting Group estimates, the total value of China's online retail market is expected to reach two trillion yuan by 2015, surpassing that of the United States.

Analysts expect cashless shopping to take off in an even bigger way as China's massive urbanisation push brings an estimated 250 million rural residents into the cities by 2020.

But whether retailers and service providers can persuade these new consumers to go cashless in a big way is another question.

This is evident in the mixed results seen in the efforts by various Asian cities to make cabbing a cashless experience.

In Hong Kong, trial schemes using credit and other cards have not got far, as cabbies do not want any hassle or misunderstanding with their passengers.

In fact, many commuters say they are unaware of the cashless schemes.

"No driver ever told me I could pay by credit card," said office worker Ivy Chan. "Sometimes I have to go and withdraw cash in order to take a cab."

Three taxi companies in Singapore recently stopped accepting cards because of a surcharge dispute with the Visa credit card company.

Japan, where taxis readily accept cashless payments either via credit cards or electronic money, has been relatively more successful in this area.

An app allows a Japanese smartphone user to make a taxi booking, which requires him to key in his card details. The fare is automatically charged to the app at the end of the journey. The user receives the trip details the next day.

It could take many, many years for something similar to take off in mainland Chinese cities, where it is not unusual for a taxi ride to end with the cabby holding your 100-yuan note to the light to check if it's a fake.

Additional reporting by Grace Ng in Beijing, Lee Seok Hwai in Taipei, and Pearl Liu in Hong Kong


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