NIKKEI ASIAN REVIEW
Nikkei Asian Review is an English-language business journal that launched in November 2013.
Economy
Anne Sophie Goninet

How COVID-19 Has Changed Payments — And Could Kill Cash

The coronavirus outbreak has changed our relationship with work, health and… cash. The fear of contamination while handling coins and banknotes has accelerated a trend that had already been growing for years: contactless payments. Both consumers and businesses that may have been previously reluctant to go digital are changing their preferred payment methods. Does this mean the end of cash?

Digital payments on the rise: The adoption of digital and contactless payments has seen significant growth all around the world, be it through websites, mobile phones or credit cards.

  • In India, a poll conducted by Mastercard on digital payments revealed a 19% increase in the actual contactless cards issued in the first quarter of 2020, the Financial Express reports. The corporation also found that contactless transactions were particularly high for purchases below $10 and in four types of establishments (supermarkets, restaurants, bars and gas stations), which registered more than 1 million contactless transactions each month at the beginning of 2020.

  • Malaysia is also one of the fastest-growing countries in Asia Pacific to adopt contactless payments, according to The Malaysian Reserve. A study conducted by Visa revealed three out of five Malaysians prefer using digital payments compared to cash before the pandemic while another report by Mastercard found that 40% of Malaysian consumers have reported increasing the use of their mobile and digital wallets.

  • With businesses closed during the lockdown and many consumers feeling uncomfortable returning to stores post-confinement, online shopping has been soaring in many countries. According to Adobe's Digital Economy Index, which analyzes global digital commerce trends, online shopping reached $66.3 billion in July 2020 — a 55% increase compared to last year. Several e-commerce companies reported very high figures: Amazon's net income increased to $5.2 billion in the second quarter of 2020, compared with $2.6 billion last year, while Argentina's MercadoLibre registered revenues that increased 123% compared with 2019. In China, the online sale of physical goods grew by 25% in June 2020 while e-commerce accounted for a quarter of the country's total retail for the same period, with categories such as cosmetics and beverages on the rise.

Multiplying cashless options: Governments and private companies alike are encouraging contactless transactions by offering new payment options for consumers in various sectors.

  • The French government, in collaboration with Visa and MasterCard, raised the contactless transaction limit of credit cards from €30 to €50 on May 11th as the country started to ease lockdown measures. French citizens immediately took advantage of the new measure: Les Echos reports that a mere three days later, three million transactions between €30 to €50 were made — raising contactless transactions by an additional 15%.

Someone using a credit card on a white POS machine. — Photo: Clay Banks/Unsplash

  • Shops and businesses are also adapting to the new trend. In the United States, a National Retail Federation survey found that 58% of retailer respondents were now accepting contactless cards, an increase from 40% compared with 2019. Big retail companies such as Walmart have expanded contactless options for both payment and delivery, such as using QR codes for purchases via smartphone apps.

  • Some companies are also trying to offer completely new contactless solutions. KEB Hana Bank, one of the biggest commercial banks in South Korea, has partnered with the Korea Expressway Corporation to create a blockchain-based toll payment system across the country's highways. D Daily reports that the project, expected to be launched before the end of 2020, will help remove cash and credit card payments as motorists use their smartphone banking apps to pay for tolls. Both parties stated that the pandemic is helped spur them to create this new system.

  • In the Philippines, GCash, the country's largest mobile wallet app with 20 million registered users, is working with the government to equip taxis with scan-to-pay systems where users pay via QR codes from their smartphones, Nikkei Asia Review reports. In parallel, the government has been promoting digital currency through an online payment platform for administrative services called EGov Pay. By the end of March, the country had increased the number of government institutions that accept digital payment via the platform by 56%.

No more cash? As more and more payments are made digitally, cash seems to be in short supply in some countries — but maybe not for reasons you would think.

  • It is now common in the United States to see signs in restaurants and stores that ask customers to pay with credit cards or exact change. Why? Because the country is facing a national coin shortage this summer. This is an unusual result of the economic slowdown caused by the pandemic. The Federal Reserve explained in a statement that the shortage was caused by a "slower pace of circulation" of coins during the lockdown. As businesses reopen across the U.S., demand for coins exceeds the available supply — to the point where banks are asking customers to bring spare change, USA Today reports. To address these disruptions, the Federal Reserve has established a "Coin Task Force," which recently released a first set of recommendations.

  • Further north, a similar deficit has arisen from a resistance to the cashless trend. The Bank of Canada is currently facing a shortage of $50 bills due to citizens hoarding cash during the pandemic. A report indicates that the increase in consumer demand for banknotes was "significant," with withdrawals concentrated in major cities such as Toronto and Montreal. The bank registered a spike in demand for all bank notes in April and May compared with the past five years. However, the hoarders may not be able to spend their banknotes at all as many businesses ask customers to avoid cash payments while others even refuse them.

Geopolitics
Hannah Steinkopf-Frank and Manon Dambrine

Thailand To Belarus: The Divides Of Democracy Protesters

In two very different parts of the world, seemingly impenetrable authoritarian regimes suddenly appear under siege by popular democratic uprisings. But as protesters take to the streets in Belarus and Thailand — and garner widespread international support — it still remains unclear if they'll be able to turn their mass demonstrations into tangible change.

Flawed democracy, military rule: Thailand, which for years has vacillated between periods of a flourishing if flawed democracy and straight-out military rule, has been run by generals who took over in a 2014 coup and suspended the constitution. The junta has faced sporadic protests, but General-turned-Prime Minister Prayut Chan-o-cha's victory for another four-year tem in a sketchy 2019 general election did not cause a major stir, until the recent unrest.

One-man show: In contrast, Belarus has seen next to no bona fide democracy since it became independent following the end of the Soviet Union. President Alexander Lukashenko (who has served for 26 years) recently won reelection in what is widely considered to be a corrupt race that included his opponent fleeing and seeking asylum in Lithuania. Many Belarusians had developed a sense of complacency with the man often described as Europe's last dictator — particularly in defending the small former Soviet country against its neighbor Russia.

What changed in Minsk: But the spark of revolution is drawing supporters from even his traditional base. Belarus's largest protest ever took place last weekend in the capital Minsk.

• Tens of thousands chanted "Resign" and condemned the police brutality that has led to at least two deaths and around 6,700 arrests. Accounts of torture and forced disappearances have only spurred more to join the protests.

• Many state employees have quit their jobs, including members of the government-controlled media, who called it a propaganda arm for Lukashenko.

• Opposition candidate Svetlana Tikhanovskaya encouraged collective action in a video, saying "We need to stop the violence on the streets of Belarusian cities. I call on the government to stop this and come to the negotiating table."

What changed in Bangkok: Meanwhile last Sunday in the Thai capital, an estimated 10,000 student protesters attended a rally at the Democracy Monument asking for the reform of the country's monarchy.

• The protest, organized by the Free People group — formerly called Free Youth — is the largest anti-government rally since the 2014 coup. Thatthep Ruangprapaikitseree, the group's leader, announced in a statement they will stick to three demands: They want the dissolution of the House of Representatives, a new constitution "based on the will of the people" and "the end of intimidation of critics of the government."

• This movement comes after a month of almost daily protests which took place all around the country; a Harry Potter-themed rally criticizing the monarchy drew global media attention. Dressed as Hogwarts students, the young protesters denounced "lèse-majesté" laws, which ban criticism of the royal family and can lead to 15 years in prison.

Recent protest in Minsk against President Lukashenko. — Photo: Ulf Mauder/DPA/ZUMA

• Like in Belarus, Thai authorities are using the threat of incarceration to silence both movement leaders and those protesting on the front lines.

Eleven activists have already been arrested over the recent protests, but police have said there are arrest warrants for a further 12 people with more under investigation. This past Saturday, the student activist Parit Chiwarak, 22, was arrested on charges of sedition.

• Thai youth are criticizing the establishment itself that is promoting obedience to authorities and tradition. They are also concerned with a worsening financial situation, with the poverty rate jumping from 7.2% to 9.8% between 2015 and 2018.

The pandemic factor: COVID-19 is raising the stakes for both the regimes and protesters in both countries.

• The tourism sector, vital for Thailand's economy, has been severely impacted. With no foreign tourists allowed into the country for months, the crisis caused millions of job losses in hotels and restaurants. According to the Nikkei Asian Review, Thailand recorded its largest economic contraction since 1999 in the quarter ending in June.

• The economy was also an important factor in Belarus: While it experienced economic growth in the first decade of the 2000s, growth especially in industrial sectors has stagnated as public debt to GDP ratios have increased. The economy is now expected to contract 2% this year because of the health crisis and decreased demand for its commodities.

Democratic takeaway: The Belarus protesters have garnered more attention and global support than their counterparts in Thailand. The UN High Commissioner for Human Rights and the president of the European Council have said they want Lukashenko to be held accountable. But the country risks turning into a proxy battlefield in a larger geopolitical landscape, as offers of military assistance from Russia are raising fears of President Vladimir Putin gaining control in the country of nine million people.

The relative diplomatic silence around Thailand since the military takeover in 2014 is a sign that the fate of the country is largely in the hands of its own people and leaders. For those risking their lives for the cause of democracy — in Bangkok, Minsk or myriad places in between — global interest in your country can cut both ways.