In a Reuters report, China’s commercial hub Shanghai’s six big banks promote digital Yuan ahead of a May 5 shopping festival. It provides consumers a payment alternative to Alipay and WeChat pay.
The banks are persuading merchant and retail clients to download digital wallets. Can make the transaction during the pilot program directly in digital Yuan known as e-CNY. This would bypass the current payment of choice laid by tech giant Ant group’s Alipay and Tencent’s WeChat Pay.
“People will realize that digital yuan payment is so convenient that I don’t have to rely on Alipay or WeChat pay anymore,” said a bank official involved in the rollout of e-CNY for the Shanghai trial, under the guide of China’s central bank.
China’s development of a sovereign digital currency is far ahead of similar initiatives in other major economies. It looks increasingly poised to erode the dominance of Ant Groups Alipay and Tencent’s Wechat pay the online payment.
In public, the People’s Bank of China (PBOC) says e-CNY won’t compete with Alipay or WeChat Pay. It serves only as a “Backup” or “redundancy”.
In private, State bank marketing digital fiat currency for the central bank bluntly describes Beijing’s intention to undercut Duo’s dominance.
“Big data is wealth”. Whoever owns data thrives, “said another banking official tasked with promoting the E-CNY”. “Wechat pay and Alipay owns an ocean of data,” so the e-CNY rollout facilitates China’s anti-trust campaign and helps the government control big data, he added. The PBoC and Tencent declined to respond to requests for comment.
e-CNY Digital Cash:
The e-CNY digitalises a portion of China’s physical notes and Coins, or currency in circulation(MO). Last year it was launched in small pilot schemes in four cities. Under two-tier distribution system, PBOC issues digital currency to banks which pass money to individual and companies.
The six banks in the e-CNY pilot schemes include China’s biggest lenders such industrial, commercial bank of China, Agricultural Bank of China, China Construction Bank, and Bank of China.
Digital wallets are still being beta tested. It bundled with a dozen popular apps including Meituan, JD.com, Didi, and Bilibili but cannot link to Wechat or Alipay. That means none of participating banks can transfer e-CNY between their digital wallets and two established payment platforms.
Alipay and WeChat Pay dominate China’s online payment market by controlling 94% of data. So mass adoption of the e-CNY won’t happen overnight.
The e-CNY will digitize “the last mile” of consumption, enabling banks and merchants to capture data and gain insight into spending patterns, said Wilson Chow, Global TMT Leader, PWC China.