The digital yuan is a legal digital currency that has been issued by the People’s Bank of China (PBoC) in pilot schemes across the country. “Wider adoption of the central bank digital currency could lead to changes in data sharing and competition… In the longer term, this could lead to changes to the revenue structure of Alipay and Weixin Pay (or WeChat Pay), which dominate non-bank mobile-based payments,” said Fitch Ratings. Used via mobile phones, they have become so ubiquitous it is estimated that 2 trillion yuan in payments were made via the two systems in 2020, as going out without a wallet is now common practice in the country. The central bank digital currency (CBDC), if adopted widely, will enable banks to obtain transaction data and consumer insight like never before, and compete with Ant Group’s Alipay and Tencent’s WeChat Pay, analysts from Fitch Ratings said.Īlipay and WeChat Pay are the two mainstream digital payment systems in China with a combined 90% market share. It remains to be seen if Chinese central bank’s rollout of the digital yuan will be frictionless. (AF) The digital yuan, China’s fiat digital currency endorsed by the central bank, is set to dethrone Alipay and WeChat Pay and push commercial banks to transform their businesses, say analysts.īut while merchants may find the “zero fee” feature of the digital yuan particularly appealing, many Chinese consumers who have already ditched physical wallets have shrugged with indifference. Alipay and WeChat Pay could ‘fade like yesterday’s flowers’ as the Chinese government rolls out its CBDC payments infrastructure for free to merchants
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