Digital Yuan Access Extends to WeChat’s Over one Billion Users
Digital Yuan Access Extends to WeChat’s Over one Billion Users In a move that could see the number of users having direct access to the digital yuan (e-CNY) to more than triple, China’s WeChat has announced that its payment platform will start to support the central bank’s digital currency (CBDC).
The mobile messaging app developed by the Chinese company Tencent has over one billion monthly active users as at the third quarter of 2021, according to Statista. Whereas, about 140 million Chinese residents had reportedly created a digital yuan account and transacted CNY62 billion yuan (US$9.7 billion) as of October 2021.
Aside from its use for messaging functions, payments can be made with WeChat Pay as well as hailing taxis and ordering food. The platform’s decision to give users the option to pay with the digital yuan is a great boost for the CBDC’s use in mainstream digital payment form. It will expectedly increase the number of Chinese residents who can potentially use the digital currency.
Significance of WeChat’s support for e-CNY
The development means that WeChat has now joined other Chinese big tech players – Alibaba and JD – which have already started facilitating the use of the digital yuan for payments. Up until now, WeChat Pay and Alipay account for almost 95% of mobile payments in China. WeChat’s inclusion now marks yet another push for the e-CNY adoption drive ahead of its expected launch at the 2022 Beijing Winter Olympics scheduled to start on February 4.
The Olympic leads major upcoming events that highlight China’s opportunity to present its CBDC’s 8-year journey to the world. The other one is the 2022 Winter Paralympics scheduled to be held in Beijing by March. The Winter Olympics will be preceded by the festive Lunar New Year during which people in mainland China send monetary gifts as “red packets” through payment apps.
These events will help build on other major steps that have been taken in recent times to promote and convince more users to embrace the digital currency. Top among them being the limited pilot testing of the e-CNY in the form of random giveaways across major Chinese cities.
Nonetheless, e-CNY expansion grows
The Digital Currency Research Institute of the People’s Bank of China’s (PBoC) recently made it possible for many consumers to use the e-CNY through pilot wallet apps that are downloadable on iOS and Android app stores.
The pilot version’s app release complements the availability of the e-CNY wallet through the electronic wallets of seven other major domestic banks: the Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of China, Bank of Communications, Postal Savings Bank of China and China Merchants Bank.
As the first major economy to issue a CBDC, all eyes are on how Chinese and international regulators will handle the digital yuan usage particularly in cross-border transactions. The anti-money laundering measures to be introduced with the digital currency would be of interest to many governments. The e-CNY’s public rollout will also be a reference point for every data privacy concern that has been raised, especially from outside China.
CBDCs by design stand to give issuing central banks greater power to monitor the spending habits of their citizens. Concerns have been raised in some quarters that such power could lead to a form of control