Alipay and WeChat might be threatened by the foray of digital Yuan as major Chinese banks push for its usage in the upcoming shopping festival
Six of China’s largest banks in Shanghai are supporting the digital yuan ahead of the May 5 shopping festival. The move represents a direct threat to the country’s top two payment service providers – Alipay and WeChat Pay.
Leading banks in China push the digital Yuan over Alipay and WeChat Pay
Alipay and WeChat could be threatened by the e-yuan disruption as China’s major banks push for its use in the upcoming shopping festival.
According to a Reuters report, some of the leading banks in China are boosting the digital yuan ahead of the shopping festival in this country. In terms of purpose, they are trying to convince merchants and retail customers to download digital wallets so that transactions in the pilot program can take place directly in digital yuan, bypassing Popular local payment methods – Alipay by Ant Group and Tencent’s WeChat Pay.
One bank official, who was not identified, stated that society should put their trust in the electronic yuan instead of traditional payment platforms:
“People will realize that digital yuan payment is so convenient that they do have to rely on Alipay or WeChat Pay anymore.”
China’s progress in launching its own digital currency is a threat to the dominance of Alipay and WeChat Pay – the two top payment providers in the country. According to Mu Changchun, director of the Digital Money Research Institute of the People’s Bank of China, these two groups account for 98% of the mobile payments market in Asia’s most populous country.
The banks mentioned are Agricultural Bank of China, China Construction Bank, Industrial and Commercial Bank of China, Bank of China, and others.
The PBoC stated that the digital currency will not compete with Alipay or WeChat Pay. Digital wallets are still in beta. They can be bundled with popular apps, including Meituan, JD.com, and Didi, but obviously cannot be linked to Alipay and WeChat Pay. In other words, participating banks will not be able to transfer cryptocurrency between their digital wallets and the top two payment platforms.
Wilson Chow, Global TMT Leader at PwC China, commented on the impact that a sovereign digital currency can have. According to him, e-CNY could digitize the final stage of consumption, allowing banks and merchants to capture data and better understand spending patterns.
Chow predicts that e-CNY will account for about 10% of China’s e-payments market in the next few years as it will coexist with Alipay and WeChat Pay.
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