The digital yuan, the digital currency issued by the People's Bank of China, will be integrated into Alipay and WeChat, two of the most widely used online payment systems and applications in the country.
The government-run Xinhua news agency reported that more than 140 million people have now created a digital wallet to store and use the digital yuan, the CBDC issued by the Chinese central bank. According to the agency's report, more than 70 million transactions have been made so far with this digital currency, which was officially launched early last year.
Now, China’s government has announced plans to integrate the digital yuan, also known as e-CNY, into two of the country’s most popular payment apps: Alipay and WeChat.
According to Changchun Mu, director of the Digital Currency Research Institute, the central bank is seeking to accelerate the adoption of the digital yuan while continuing its steady development, in order to connect the CBDC with the real economy and the digital industry.
Businesses in China must implement digital yuan payments
During the 2023 China International Fair for Trade in Services, Director Mu announced that digital yuan payments will also be included in all businesses in the country.
The Chinese government wants users to be able to Pay with the digital yuan in all retail scenarios possible, so the digital currency will be included in the applications, platforms and payment tools traditionally used in the country. The measure includes businesses implementing QR codes so that people can pay using the CBDC.
According to Mu, the digital yuan is the evolution of money tailored for the coming era of the digital economy, so payment platforms and providers need to update accordingly.
In the future, the Chinese government will also upgrade the wholesale payment infrastructure to connect the digital yuan with the industrial sector.
The digital yuan in the bowels of e-commerce and retail
China's plans to expand the use and adoption of its CBDC digital currency also include its connection with the financial market, so that the digital yuan can be used for settlement. Smart contracts that allow the digital yuan to be used for bond payment (DVP) and delivery payment (PVP) are also planned to be implemented to improve the efficiency of wholesale payments, Mu said.
So far, both online and physical merchants have integrated the digital yuan among their payment options, making it easier for consumers to access and use this CBDC.
For example, the online trading platform JD.com, one of the largest in China, was one of the first to accept digital yuan payments from its website and mobile app. JD.com allows users to scan a QR code to pay for their purchases from the e-CNY digital wallet.
Also, the local services company meituan, which offers food delivery, hotel bookings, transportation and other services, has been part of the central bank’s pilot to implement digital yuan payments. Last year, China handed out 30 million yuan (about $4,5 million) to Shenzhen citizens in the form of digital red packets, which were delivered to each recipient via Meituan; citizens can then spend their digital currencies on the platform.
Also, several physical retailers, such as supermarkets, restaurants and shops, have installed payment terminals that accept the digital yuan, allowing consumers to scan the QR code on the terminal with their digital wallet to complete the transaction.
Mu stressed that the digital yuan is compatible with existing payment platforms and bank deposits, offering a safer, more efficient and more convenient alternative for citizens. The digital currency has also been implemented for the payment of salaries of civil servants and public employees in Jiangsu Province.
Driving financial transformation
China sees digital yuan as an important catalyst for financial transformationFaced with this possibility, the country's central bank has created various products and services focused on digital currency, such as smart cards that allow payments to be made without the need for an Internet connection or a bank account, digital wallets, payment terminals, smart devices, among others, with which it seeks to consolidate the digital yuan as an alternative to cash and traditional electronic payment systems.
The Chinese government is also seeking to boost financial innovation and digital inclusion through the digital yuan, to strengthen its monetary sovereignty against the influence of the dollar and global, decentralized cryptocurrencies such as Bitcoin.
In its latest reports, the Central Bank of China reported that there are About 16.500 billion digital yuan in circulation, equivalent to approximately $2.300 billion dollars.
Although China is leading the development of a sovereign digital currency, along with Nigeria, which launched the e-Naira, and the Bahamas, which has the Sand Dollar, there is still much uncertainty about the advantages, risks, and degree of acceptance and adoption of these digital currencies.
Many people, especially in the crypto community, are resistant to this form of centralized digital money which can undermine privacy and financial freedom.
Continue reading: China plans to build a unified Digital Identity system for the Metaverse
Main image from China Daily
