An official from the People’s Bank of China has indicated that the upcoming ‘Digital Yuan’ will be available on AliPay and WeChat Pay.
The clarification of this point is a major deal in the Chinese context given that both AliPay and WeChat Pay account for the vast majority of the country’s mobile payments transaction volume.
Data from a research paper published in July by iResearch consulting firm showed that Alipay had 55% of the market share followed by WeChay Pay with 38% – giving the two firms nearly 90 percent of the entire mobile payments market.
Already involved in ‘Digital Yuan’ pilot
While the news is a boon for the potential reach of the PBoC’s DCEP, both company’s involvement in the pilot project of the upcoming CBDC has been the subject of much interest for many months.
Earlier this year the Chinese Central Bank had confirmed that both AliPay and WeChat Pay would be involved in testing the ‘Digital Yuan’ as part of the pilot project researching the ins and outs of its own CBDC between banks and major corporates.
The initial testing phase also involved the two tech firms as well as the Industrial and Commercial Bank of China, the Bank of China, the Agricultural Bank of China as well as Union Pay.
Further reports suggested that these firms were involved in testing cross-company transactions and payments systems, with no wider involvement of the general public or users of the mobile service platforms.
Bigger footprint for the ‘Digital Yuan’
There had been suggestions that the launch of the ‘Digital Yuan’ would allow the PBoC to wrestle back some share of financial transactions that were being handled by the likes of WeChat Pay and AliPay.
However the latest commentary from the PBoC’s head of its research institute for digital currency Mu Changchun has confirmed that the ‘Digital Yuan’ will be a currency of exchange on these platforms, not a platform itself.
“They don’t belong to the same dimension. WeChat and Alipay are wallets, while the digital yuan is the money in the wallet,” Changchun said during a speech at the Bund Summit which was also attended by Alibaba co founder Jack Ma.
According to a fintech consultant that spoke to the South China Morning Post, the ‘Digital Yuan’ is also distributed through its own app which users will be able to use instead of other platforms like AliPay or WeChat Pay.
This was illustrated by the first public involvement in the testing of the DCEP in Shenzhen this month. 50,000 were recipients in an airdrop-style ‘lottery’ of the ‘Digital Yuan’ which over two million people had applied for. These users had to download a specific mobile app to access the DCEP giveaway.
