EP37: Big data, data tracking, data flows and Chinese cashless system

Summary:

In this episode, we discuss the increasing prominence of cashless societies, specifically focusing on China's rapid transition to a digital payment system. We highlight the use of mobile payment platforms like WeChat Pay and Alipay, the widespread adoption of QR code transactions, and the government's introduction of the digital yuan. Furthermore, the sources examine the implications of a cashless society for big data, emphasizing the collection and analysis of user data for both commercial and governmental purposes. We express concerns about the potential loss of privacy and the potential for manipulation in a fully cashless society.

Questions to consider as you read/listen:

1. How does the shift towards a cashless society impact the role of big data and privacy concerns?
2. What are the key technological drivers and societal implications of China's cashless payment system?
3. What are the potential benefits and drawbacks of a cashless society in terms of economic and social impacts?

Long format:

Big data, data tracking, data flows and Chinese cashless system

There’s a new sentiment that says the new war front isn’t physical, but rather informational. The flow of data shapes the flow of money. Geoeconomics.

A simple example are Internet cables which are a tangible aspect of data geo-politics. Not as physical is the collection, aggregation and interpretation of big data. From national security projects such as Project Echelon to big data collection in the corporate world like today’s news brief article that highlights the DOJ efforts regarding data tracking and search engine matters by Google with big data (https://www.npr.org/2024/10/09/nx-s1-5146006/justice-department-sanctions-google-search-engine-lawsuit)

I thought on this.

I was reminded of stories regarding Chinese cashless system efforts.

China's cashless system is based on digital wallets, QR codes, and other technologies to enable a variety of transactions:

The most popular domestic Chinese payment methods are WeChat Pay and Alipay, which are owned by Tencent and Alibaba, respectively. These apps allow users to make purchases, transfer money, book transportation, and more. They use a variety of technologies, including QR codes, facial recognition, fingerprint scanning, and voice recognition.

China's domestic card network, which issues debit and credit cards, and provides EPOS machines for merchants. UnionPay cards are accepted at most ATMs and POS terminals, but foreign-issued cards may not be as widely accepted.

Some Chinese cities have rolled out facial recognition payment systems that allow users to pay for purchases by smiling.

How pervasive is it?

As of June 2023, over 943 million people in China use mobile payments, which is a 38.3% penetration rate.

Alipay and WeChat Pay are the most popular payment apps in China, with 92% and 85% of respondents preferring them, respectively.

QR codes are widely used for payments in China, with buyers either scanning the seller's QR code or displaying their own.

The government introduced the digital yuan to replace physical bank notes, in part due to the COVID-19 pandemic.

Without cash, we would be forced to leave a record of everything we buy. While this may not bother some, there are many who worry that governments and/or corporations could use our purchasing histories as a way to track us, monitor us, influence us, persuade us, and even intimidate us.

Fully implemented, moving towards a cashless system will significantly increase the role of big data, as every digital transaction generates a vast amount of data about consumer behavior, spending patterns, and location, which can be analyzed and utilized by businesses and institutions to gain valuable insights and make informed decisions; this raises privacy concerns as well.

I haven’t fully settled on this other than it *may* be an issue. I’m noodling on it. Anyone else noodling on it or want to here?

Sources:

https://www.brookings.edu/articles/chinas-digital-payments-revolution/#:~:text=While%20America%20spent%20the%20past,network%20incentives%20has%20been%20unleashed

https://www.forbes.com/sites/zennonkapron/2024/05/26/the-limits-of-cashless-payments-in-china/#

https://daxueconsulting.com/payment-methods-in-china/#:~:text=Over%20943%20million%20individuals%20actively,Chinese%20or%20international%20credit%20cards

https://theconversation.com/chinas-experience-with-mobile-payments-highlights-the-pros-and-cons-of-a-cashless-society-201177#:~:text=Over%20the%20past%20two%20decades,just%20their%20smartphone%20or%20smartwatch

https://www.cambridge.org/core/books/abs/law-and-the-party-in-china/technologies-of-risk-and-discipline-in-chinas-social-credit-system/9C07910C3EF48B555D3D481BDB6A0A9E

https://www.paymentsjournal.com/a-cashless-future-can-big-data-change-how-we-pay/#:~:text=As%20society%20slips%20into%20a,for%20fintech%2Dinfused%20money%20movement