Hema criticized by central bank officials for rejecting cash payment

Image credit: Bailey Hu/TechNode

A unit of China’s central bank admonished new retail supermarket Hema for not accepting cash payments, highlighting the country’s increasing reliance on digital payment channels.

Consumers complained to the Shanghai branch of the People’s Bank of China (PBoC), saying that the Alibaba-owned chain had refused their requests to pay in cash, reports Shanghai Securities News (in Chinese). Officials confirmed the claims after an investigation and requested Hema allow consumers to make cash payments.

Typically, users of Hema’s app are asked to provide details of their Alipay account or link their bank card to pay for Hema purchases.

Hema told TechNode that the company has established cash payment windows in all 100 of its stores as required by relevant laws and regulations.

This is not the first time the company has been accused of refusing cash. Chinese shoppers started to complain about its branches only accepting Alipay payment last year.

As Chinese tech giants promote the idea of “No Cash Society”, the criticism points to the growing concern amongst regulators, regarding mobile payment methods being too prevalent.

In an official announcement released in July, PBoC reasserted the renminbi as the country’s legal currency, and therefore no business entity or individual can reject cash payments. As a consequence, local branches of the PBoC have been cracking down on and censuring companies that don’t accept cash.

The PBoC said that it encourages the growth of different payment methods, not only to support new retail businesses but to ensure that consumers’ freedom of choice is respected. It added that as a model of new retail businesses, Hema should serve as an example of inclusive development with multiple payment methods.

Hema has expanded rapidly since September. According to Alibaba, On Nov. 11, Hema’s 2018 Double 11 sales volume surpassed its 2017 total in just two and a half hours. As of Nov. 30, the company operates 100 stores nationwide.

However, its operations have not been free from controversy. Last month, employees at one of the company’s Shanghai stores were caught switching expiration dates on vegetables to make them seen five days fresher. The chain’s Shanghai manager was subsequently fired.

At Alibaba’s Investor Day in September, the company described Hema as the “pathfinder” of the giant’s new retail business. According to Hema CEO Hou Yi, the daily average sales at stores that have operated for more than one and a half years exceeds RMB 800,000 ($ 116,200).