Can e-money become the new global standard?
Horace C. White
Modern Tokyo Times
E-money set to become the new world order amid setbacks
Digital revolution is currently sweeping through the global financial services industry, disrupting the way people do business around the world. To be sure, more and more banks are compelled to key into the revolution to avoid being kicked into obsolescence. Indeed, every part of the world is feeling the impact of the revolution. Taking a walk down the streets of Vaduz in Liechtenstein, one would notice that a gaggle of youths is signing up on an app provided by Germany-headquartered fintech firm DOCOMO Digital. Without mincing words, this e-money service, which is regulated by Liechtenstein’s financial watchdog, Financial Market Authority (FMA), delivers topnotch service to its users. Away from Europe, where DOCOMO Digital is championing the e-money (electronic money) revolution of Liechtenstein, one may proceed eastwards to China. In China, this revolution is raging like wildfire.
E-money in China
Well, Liechtenstein’s e-money narrative is not quite different from that told on the streets of Beijing in China. The emerging world’s power has seen leading online retailer Alibaba Group Holding Limited and messaging platform Tencent Holdings Limited do amazing jobs in its space. Going down memory lane, in 2004, Alibaba created Alipay to connect to its marketplace millions of users who don’t have credit and debit cards. In a similar vein, Tencent’s WeChat launched in 2005 to connect loved ones and enable users to keep in touch. Now, Bloomberg reports that the popularity of these apps has swelled, thus boasting combined active users of over 1.5 billion people every month. With respect to the volume of transactions that takes place on the two platforms, they separately processed over $2.9 trillion worth of transactions in 2016. Bloomberg report emphasized that US investment bankers who visited China returned worried sick due to the clout these Chinese companies wield back home. In spite of their fears, the United States is not lagging behind others.
E-money in the United States
Taking a long-hour flight to the West to grasp the e-money revolution in the United States is worth every stress. To be clear, it is a different ball game here. One may keep pondering why the visiting bankers were perturbed upon returning to the US. Understandably, the Chinese users tend to derive the same value as the American people. However, the whole thing works differently. The thing is, the Chinese users enjoy all the amazing services at no fee whereas the Americans pay through their noses. To bring the cause into context, in the United States, a lot of e-money services are still enabled by banks, and they tend to attract lots of transaction fees. A sneak peep at the US fintech industry reveals that there are seamless links between banks and e-wallet service providers, such as PayPal Holdings Inc., Apple Inc. to mention but two. This union ensures that users pay for every financial service rendered. Despite these fees, many users still prefer e-money to the traditional method of carrying of cash about.
Why are many users opting for e-money?
The question that would probably come to mind is, “Why are many users going for e-money?” To be clear, e-money offers lots of juicy benefits that cash transactions lack. With the aid of e-money, users can conveniently pay their bills and order items they like without stepping out of their homes. What’s more? The risk of either losing cash or the stress of carrying cash about has a place with e-money. In addition, users wouldn’t have to worry that they could suffer a burglary attack and lose their hard-earned cash. In fact, the benefits that e-money payment option offers are just endless, which explain why its popularity is on a steady rise.
Huawei products ban in the US is ill-conceived
As the e-money revolution continues to gather momentum, the US/China trade spat is likely going to hamper it if left unresolved. In August, President Trump inked a Defense Authorization Act. The aim of signing this Act was to restrain government officials and contractors from using tech products from Chinese tech giants, Huawei and ZTE. The Trump administration disclosed that the move had gained urgency given that the products are a threat to national security. Well, this ban will be effective for the next two years. US authorities fear that the Chinese government could use the mobile phones from the two companies to spy on her officials. However, Huawei and ZTE issued different statements, saying that the US government claims are beyond the bounds of possibility. Huawei further argued that the ban was petty, adding that the measure impedes competition and globalization.
The US should retrace its steps
Experts are, however, of the opinion that President Trump should focus on reviving small-scale businesses as a way of further stimulating the US economy. It would be recalled that former president Obama promoted the administrators of small businesses to cabinet level in his time. According to an Entrepreneur 2016 report, there are about 28 million small businesses in the United States. Of the 26 million small-scale businesses, only 6 million have employees. Therefore, supporting these businesses will reposition the US economy by creating more wealth and jobs in the United States.
Modern Tokyo News is part of the Modern Tokyo Times group
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