Cash Is No Longer King

30 October 2018 by Joe Byrne in Investments

Cash Is No Longer King

It is a changing world, one that is moving very quickly. Moore’s Law is a quoted observation that states computing power double every 2 years or so. With this rapid increase is computing power, ‘Big Business’ is putting this new technology to work (and making a profit).

Technology improvements help make big strides in improving efficiencies but tend to also make some jobs and products obsolete. Electronic payments or e-payments has been one such technology improvement making our daily purchases effortless but also making physical cash obsolete as a means of payment.

China Mobile Payments Dwarf the USA1

What is remarkable isn’t that the use of non-traditional payment channels is on the rise in China, but the pace and scope at which it is happening. It has largely been propelled by Alipay and Tenpay, the digital payment platform owned by Tencent.

In 2016, Chinese consumers made RMB 38 trillion (approximately US$5.5 trillion) worth of payments on their smartphones and tablets using non-bank operated e-payment services (so-called ‘third party’ mobile payments), a 215% increase from 20152. This was 50 times the transaction value in the US, which saw US$112 billion worth of payments in 2016 via mobile payment platforms like PayPal, Apple Pay and Google Wallet, according to Forrester Research.

china mobile payments

When one looks at online payments more broadly to include all of internet, mobile, telephone and digital TV payments3, data from China’s central bank shows that online transaction value via non-bank platforms nearly reached RMB 100 trillion (~US$14 trillion) in 2016, a 970% increase over four years by both transaction volume and value.4

online payments

Source: People’s Bank of China (PBoC), Payment & Clearing Association of China and Platinum.


The US has been behind the 8-ball for almost a decade when it comes to EFTPOS (electronic funds transfer at point of sale) and e-payments. During my last trip back to New York in 2015 where I could not believe ETPOS was not readily available across the retail network. I recall asking a cashier if I could use my debit card and she asked, “What is that?”.

Fortunately, our investment consultants picked up on these strong fundamentals and strong business case for e-payments and have been investing in these companies for some time now. Companies such as Tencent (Tenpay), PayPal, and Apple (Apple Pay) feature in our diversified portfolios.

As always, if you have any questions on this or any financial matter, please contact your financial adviser.


1 ‘Cash in, while cash is on the way out’, by Constance Zhang, Platinum Asset Management,, downloaded 9/10/2018.
3 However, not including payments “for entertainment”, such as the peer-to-peer exchange of electronic red envelopes between family and friends.

Article by Joe Byrne, BA, AFA - Read More

Disclaimer: This article has been prepared for the purpose of providing general information, without taking into consideration any particular investor’s objectives, financial situation or needs.  Any opinions contained in it are held as at the report date and are subject to change without notice.  This document is solely for the use of the party to whom it is provided.

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