For 18 years, Liu Yau-li has been bringing tourists to China. In that time she’s seen the full evolution of China’s digital payment system. Twenty years ago, she says, everyone used cash. But today it’s not unusual to find places that can’t or won’t accept cash at all, particularly after the pandemic when much of the world grew wary of handling shared items.

If visitors want to enjoy convenient travel, she says, they’re better off downloading one of the major payment apps and hoping it works for them.

China’s two primary payment apps, Alipay and WeChat pay, launched respectively in 2004 and 2013. Today, they slickly integrate retail purchases, person-to-person money transfers, transport bookings, and a host of other transactions.

The apps are fairly seamless, and scannable QR codes to facilitate transactions are ubiquitous across China, from major retail outlets and food carts, to people begging for money in the city streets. They go “beyond the basic mobile payments found in other countries”, with facial recognition, fingerprint scanning, and voice recognition, says Prof Sun Baohong, a senior professor of marketing at Cheung Kong Graduate School of Business.

For most people it’s simple enough, but using them usually requires a Chinese bank account, or providing extensive identification to connect to a foreign account – if the foreign bank allows it.

The hegemony of this system can also make life difficult for China’s citizens who don’t have the level of technological literacy required for the modern world.

“China is one of the top countries for using cashless payment systems, but penetration is not 100%,” says Sara Hsu, an associate professor at the University of Tennessee, specialising in supply chain management.

“Elderly Chinese still often prefer to pay with cash and some struggle with using mobile payments.”

Less than a year ago, state media was lauding China’s trajectory towards becoming the world’s top country for cashless transactions. Xinhua reported cash had dropped to just 3.7% of the total money in circulation. But in recent months China’s government has appeared to push back, with numerous announcements about “streamlining” payment systems for visitors and elderly people.

In December the state People’s Bank Of China (PBOC) and the State Administration of Foreign Exchange issued guidelines and established a working group designed to improve the financial arrangements for visitors, including boosting the number of businesses and ATMs that took foreign cards.

Three months later the PBOC and the Beijing municipal government issued further guidelines, including broadening acceptance of foreign e-wallets, while not requiring ID from foreigners using payment apps below a particular threshold.

In April, 50 new taxis started operating in Shanghai – the first in the country that could accept foreign-issued credit cards. State media said 2,000 were expected by November. Drivers were also directed to carry cash to give change.

Then, last week, the PBOC together with several ministries issued a joint notice requiring local commerce authorities to ensure retailers and hospitality venues in key business and tourist districts were fully equipped to take foreign payments, and that retailers linked to people’s daily lives – including markets, breakfast shops and pharmacies – could take cash.

“The situation has improved to some extent, but this [recent] directive pushes China’s policy of inclusive finance further to ensure that both elderly Chinese and foreigners can participate in economic transactions,” says Hsu.

Prof Sun says the new directives were recognition of existing gaps in China’s payment system, and a “significant step towards fostering a more inclusive financial environment”.

But it’s not a reversal of China’s trajectory towards a “fully digital transaction environment”, he says, noting trends to integrate social media and e-commerce platforms with the payment systems, and plans for a national digital currency.

“The payment process is just one aspect of a comprehensive digital ecosystem that aids consumers in decision-making and purchasing, demonstrating a sophisticated yet seamless integration of technology throughout the consumer journey,” he said.

Liu is more circumspect. On recent visits, she hasn’t seen a big change yet. “Although there are [policy] promotions and it is the rule that the use of cash cannot be refused, it’s still not very effective today.”