Merchants Can’t Refuse Digital Yuan Payments, DCEP Operational Guide Shows
Unlike for other mobile payment services in China, Chinese merchants participating in the digital currency electronic payment (DC/EP) project cannot refuse payments in digital yuan (or e-yuan) when made to them.
This is according to an “operational guidance” document reportedly made available to merchants as part of the DC/EP project which has been in its pilot phase for some time, the South China Morning Post reports.
“A merchant can decline payment in AliPay or WeChat Pay, but cannot decline payment in e-yuan,” the document says, adding that unlike the e-yuan which has no fee in payment settlements, “there are settlement fees for Alipay and WeChat Pay accounts”.
The report also notes that the document maintains that the e-yuan is a digitalised form of the yuan issued by the state and has the same legal status as cash hence “(t)he digital renminbi system installation is being carried out only by large state-owned commercial banks.”
Digital yuan rise vs. competitors
According to a 2020 Deloitte global blockchain survey, China Mainland (94% among respondents 94% among respondents) is one of the leading areas of the world where top executives consider digital assets – something represented in a digital form that has intrinsic or acquired value including cryptocurrencies, digital representations of land, commodities or fiat currency, tokenized debt or equity etc – as a promising alternative to or replacement for fiat currencies.
The last major e-yuan trial in Suzhou on December 12 (the “Double Twelve” shopping festival) which had over 100,000 electronic “red packets” with 200 yuan (US$30) in e-yuan handed to users by lottery shows a rising interest in digital yuan usage.
Users were to spend the e-yuan at about 10,000 retailers including several merchants that had to only open a bank account and request an electronic wallet to join the pilot phase. The e-yuan is also used for payments online on China’s second-biggest online mall, JD.com and with merchants who either display a QR code linked to their bank account for users to scan and pay or point-of-sale (POS) machines even without an internet connection.
A wider e-yuan usage will challenge AliPay and WeChat Pay platforms which jointly account for 94% of mobile payment services in China. While there have been speculations on the competitive nature the launch of the e-yuan will take as it co-exists with the two platforms which are not state-backed, it is still not clear whether users and merchants will have to accept the e-yuan on top of existing electronic payment as WeChat Pay and AliPay services since it will require them to use another app on their phones.
More details about e-yuan app
In line with its trial conditions, some level of confidentiality is still being maintained about the e-yuan app as it is still not fully ready yet according to the South China Morning Post. While it is being considered an experimental model for necessary bugs to be fixed, the app reportedly has a feature that disables a smartphone’s screenshot function to make it more difficult for a user to show others the interface for now.
Also, the service under a hammer-and-sickle symbol of the app, is said to allow members of China’s Communist Party to pay their membership fee to the ruling party with the e-yuan.