The People’s Bank of China wants Ant Group and Tencent Holdings Ltd., which operate payment networks Alipay and WeChat Pay, respectively, to help it develop digital yuan, The Wall Street Journal reported, even as the state-backed digital currency could diminish their viability — or wipe them out completely.
Most of the 1.4 billion people in China use either Alipay or WeChat Pay to make mobile payments, but the digital yuan payment method could trump both once it’s officially rolled out, a plan that’s on the fast track with more than $5 billion in completed transactions through the end of June.
In March, China’s central bank said digital yuan would not replace Alipay and WeChat Pay, but could serve as a backup to the more established services that make up about 98 percent of the country’s mobile payments market.
Almost 25 million personal and corporate digital wallets have used the central bank digital currency in 1.3 million ways on almost 71 million transactions to pay bills, ride public transportation, shop and cater events. China has handed out about $41.5 million in digital yuan via lottery and expects a widescale test during the 2022 Winter Olympics in Beijing in February.
China has become increasingly reliant on digital currency in the last decade or so, with cash looked at as an afterthought in some big cities.
The People’s Bank of China (PBOC) is also looking into using digital yuan for cross-border payments and vows to ensure security and privacy related to the new currency.
The PBOC indicated that it was planning to evaluate an international program with other central banks, “preconditioned on mutual respect to monetary sovereignty and compliance,” Reuters reported.
Further, China’s central bank said it was “willing to participate actively in international exchanges of views on digital fiat currency and discuss standards setting … in order to jointly advance the development of the international monetary system,” according to the Reuters report.