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The Transition From Cash Payments to Electronic Payments

Increasingly, various countries use electronic payment systems to deliver payments by numerous means. These electronic payments have replaced paper payments used for a long time for completing various transactions. Some of the major electronic payments systems developed in various countries include prepaid cards, smart cards, mobile money, and electronic fund transfers. In China, for instance, mobile money is widely used where transactions are made through mobile phones, thus creating efficiency in transfers requiring huge cash transactions.

Mobile money transfer is a technology that permits people to receive, store and spend money using a mobile phone. , the main use of this money transfer method is to make cash transactions through mobile phones, which could have been done in the form of paper payments. Some good examples of mobile money payment in China are Alipay and WeChat, which act as a payment tool and as a tool for customer attraction (Hancock &Humphrey2017). The advantage of this money transfer method is that one can transfer money both in and outside the country, accelerating global transactions among countries.

In China, two main factors made it able for the mobile payments revolution. The major one is high levels of bank accounts possession, which offered a foundation for financing mobile wallets. WeChat and Alipay were able to dive into the prevailing financial setup in the form of bank cards and bank accounts settlement and clearance systems. The other common factor is widespread ownership of smartphones which increased from 28% in 2013 to 71% in 2016. Smartphones and banks allowed users to connect the accounts with their phones using various apps.

The onset of the Covid-19 in China, spreading to other countries in 2020, caused an increase in demand for electronic payments, hastening the shift from paper payments to mobile payments. When the global pandemic started, many people began to pay attention to their spending patterns (Wisniewski et al., 2021). Due to the global restrictions, the World health organization advised people to adopt electronic payments to minimize the spread. The younger generations were convenient that the main reason for switching from paper payments to e-payment, such as mobile payments, was to avoid the spread of germs (Wisniewski et al., 2021).

This type of electronic payment is easy to use and navigate as it involves the users downloading an app used for money transfer. Once the app is downloaded, the sender can send money at any time and to many recipients at their convenience. Practically, the sender must first deposit cash into the mobile wallet before making any cash transactions. Then, the sender selects the send money option, where they enter the recipient’s phone number and the amount of money they wish to spend. The final step involves selecting the security pin and verifying the accuracy of the information used (Hancock &Humphrey2017).

Mobile money transfer is greatly suitable for businesses, customers, and suppliers. In the setting of trades payable, electro payments help decrease costs, increase visibility, improve customers and sellers’ relationships, and provide improved security compared to paper payments. Electronic payments are fundamentally highly safe than paper payments, and precise methods such as virtual and credit cards offer greater fraud protection. Moreover, electronic systems are comprised of controls and features to enable secure the process of payment.

Mobile payments are much faster than paper payments such as cash and cheque payments. In this case, mobile payments lack any time and location constraint; therefore, payments are easily paid anywhere across the globe. In China, mobile payments have eradicated the requirement for people to make payments in banks. Therefore, customers minimize time wastage as they do not have to make long lines to the banks to make payments. They can easily pay you by using a mobile payment app.

The transition from cash payments to mobile payments in China saw many businesses becoming more efficient in integration accounts. Mobile payments are vital as they help employees reduce the time spent handling cash. Therefore, they can spend more performing meaningful activities that are profitable for the business. They have also led to easy and efficient management of cash flows in many businesses allowing businesses to migrate to a higher business environment.

In conclusion, payments completed through mobile payments are convenient, cheap, and have improved security. The system also allows sellers to collect important information about the customers. The pertinency of mobile payment systems is quite remarkable and has penetrated globally, reducing cash transactions. Mobile payments are appropriate for micropayments and online payments.


Hancock, D. and Humphrey, D.B., 2017. Payment transactions, instruments, and systems: A survey. Journal of Banking & Finance, 21(11-12), pp.1573-1624.

Humphrey, D.B., Kim, M. and Vale, B., 2011. Realizing the gains from electronic payments: Costs, pricing, and payment choice. Journal of Money, credit and Banking, pp.216-234.

Shin, H., 2015. Paper money, the nation, and the suspension of cash payments in 1797. The Historical Journal, 58(2), pp.415-442.

Wisniewski, T.P., Polasik, M., Kotkowski, R. and Moro, A., 2021. Switching from cash to cashless payments during the COVID-19 pandemic and beyond. Available at SSRN 3794790.


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