A Chinese commercial bank of China is conducting internal testing of China’s digital yuan DCEP wallet, and four cities are listed as outlets, namely Shenzhen, Xiong’an, Chengdu and Suzhou according to 8btc’s report.

People in charge of the DCEP from China’s central bank stressed that the current revealed information of DCEP is the test content in the process of technology research and development, which does not mean that China’s digital DCEP has been officially launched. The current revealed test of DCEP will not affect the commercial operation of listed institutions, nor will it affect the RMB issuance and circulation system, financial market, and economy outside the test environment.

The impact of DCEP on the third-party payment in China

The third-party payment institutions in China have three types of businesses, which are influenced by digital yuan in the future. One is the central bank’s permitted payment business; another is the business derived from the payment platform’s user flow advantages, such as access to the sales of financial products such as a monetary fund. The third credit and wind control related-businesses derived from the payment of data information.

The third-party payment institutions are mostly based on Internet payment services. The third-party payment institutions obtain a large number of customer flows and funds and derive the other two important businesses mentioned above. On the one hand, it successfully sells huge amounts of financial products, on the other hand, it enhances the user’s stickiness.

Powerful third-party payment institutions leverage credit investigation and risk control business with big data of user payment, expanding microcredit products such as cash loans; develop third-party credit investigation, and provide risk identification services for commercial institutions and users with personal credit status analysis.

According to the released patent information, the upcoming DCEP supports chip card and mobile near-field communication (NFC) on the client-side. The DCEP is very convenient as a payment. More importantly, the central bank’s digital currency enjoys the central bank’s credit endorsement with higher credit.

If the central bank’s digital currency wallet is completely independent of the third-party payment institutions and does not open the interface to the third-party payment institutions, some or even most of the functions of the third-party payment institutions are likely to be replaced in the future. Therefore, third-party payment institutions should timely participate in the issuance mechanism of the central bank’s digital currency. The powerful third-party payment institutions should strive for cooperation with commercial banks of similar status in the issuance mechanism of the digital currency, such as the Industrial and Commercial Bank of China, China Construction Bank.

In the view of Chinese financial regulators, the third-party payment institutions are similar to the “off-staff finance” beyond the formal finance. After DCEP is widely used in the payment system, if the free payment strategy is adopted, it will leave a huge impact on the third-party payment institutions. On the one hand, it makes the third-party payment institutions lack of competitiveness; on the other hand, it makes it difficult for the third-party payment institutions to make profits, and in extreme cases, a large number of third-party payment institutions may even shut down.