Some of the largest state-owned banks in China are actively promoting the digital RMB as an excellent payment method for the country’s two leading payment systems, Alipay and WeChat Pay.
On April 26, Reuters reported that six of the largest Chinese banks were selling in Shanghai a new digital currency issued by the Chinese central bank, or CBDC, ahead of the online shopping festival on May 5.
Banks encourage merchants and consumers to download a digital wallet and shop with CBDC or e-CNY. This will bypass the existing payment methods of millions of customers – Ant Alipay groups and Tencent WeChat Pay.
The report notes that a bank employee hired to conduct a CBDC test in Shanghai under the leadership of the People’s Bank of China has specifically described the digital currency as superior to Alipay and WeChat Pay, stating:
“People will understand that electronic payments in RMB are so convenient that I no longer need to rely on Alipay or WeChat Pay.”
In an online discussion at the end of March, Mu Changchun, head of the PBoC cryptocurrency research institute, said that Alipay and WeChat Pay account for 98% of China’s mobile payments market and pose a risk to domestic financial transactions. System if they have problems.
Changchun noted that the central bank does not intend to compete directly with Alipay and WeChat Pay, but rather act as a reserve to “provide financial stability in the event something happens” to them.
However, the country has also stepped up efforts to curb the dominance of tech giants and combat competitive behavior in the internet sector. According to CNN, in early April, the government imposed a record $ 2.8 billion fine on Alibaba for monopolistic activities.
The introduction of the Chinese digital yuan will allow the central government to reap some huge rewards from economic data maintained by the country’s leading payment systems.
“Big data is a fortune.” Another bank employee tasked with promoting CIB customers told Reuters that anyone with data thrives, adding, “WeChat Pay and Alipay have a sea of data.”
Commenting on the May 2020 consensus conference, academic Martin Chorzimba said it was “difficult” for Chinese financial authorities to get the country’s leading payment companies to transmit the data they had collected on their customers. “The Central Bank of China (CBDC) in China has the capacity to allow the central bank to obtain more payment data, as well as restore the strength of these companies.
The six banks in the CBC’s pilot schemes consist of the country’s largest lenders, including the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, HSBC, and the Construction Bank of China.
On April 1, China completed its first digital pilot project across the yuan-denominated border with Hong Kong.