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 Monday, Reuters reported that six of the largest Chinese banks are 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, also known as e-CNY. This will bypass the existing payment methods of millions of customers, such as Ant Groups Alipay and Tencent WeChat Pay.
The report notes that a bank employee appointed 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 in late March, the head of the PBoC cryptocurrency research institute, Mu Changchun, said that Alipay and WeChat Pay account for 98% of the mobile payments market in China and pose a risk to the domestic financial system should problems arise. …
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 case something happens” to them.
However, the country has also stepped up efforts to curb the tech giant’s dominance and counter anti-competitive behavior in the internet sector. According to CNN, in early April, the government imposed a record $ 2.8 billion fine on Alibaba for the monopolistic actions.
The introduction of the Chinese digital yuan will allow central authorities to control some of the huge prizes for economic data held by the country’s leading payment systems.
“Big data is wealth.” Another bank clerk charged with promoting CBDC currency 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 Churzimba said it was “difficult” for Chinese financial authorities to persuade the country’s leading payment companies to share the customer data they had collected. “The Central Bank of China (CBDC) has the capacity to allow the central bank to access more payment data, as well as restore the strength of these companies,” he added.
The six banks in the CBK’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 test for a digital yuan across the border with Hong Kong.