Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
The People’s Bank of China is looking to leverage the massive user base that WeChat has for accelerated adoption of its digital yuan.
WeChat, China’s biggest messaging app and major payment service, will start providing support for the country’s central bank digital currency (CBDC), the digital yuan (e-CNY). This development comes as the central bank aims to expand adoption of the token. Although the Chinese government is yet to start a public nationwide rollout for the digital yuan, collaborating with WeChat comes with massive advantages. Collaborating with the Tencent-owned ‘super app’ will provide access to a pool of more than 1 billion potential e-CNY users.
The People’s Bank of China (PBOC) has conducted limited trials of the digital yuan in select cities through lotteries. In those places, the governing bank disbursed small amounts of the token to some citizens. Now, the PBOC wants to see far greater adoption of e-CNY in everyday transactions despite the absence of a nationwide implementation date.
WeChat’s Diverse Functionality Makes It a Prime Candidate for Promoting the Digital Yuan
WeChat’s multifacetedness makes it a very popular choice in China. In addition to instant messaging akin to WhatsApp, the platform also provides payment services through WeChat Pay. Users can pay for products and services by showing merchants barcodes on their phones in physical stores, or for online purchases. Furthermore, users can also order food and hail taxis, as well as play video games. WeChat Pay reportedly has more than 800 million monthly active users.
WeChat is one of the dominant platforms in the Chinese mobile payments space alongside Alibaba (HKG: 998) affiliate Ant Group’s Alipay. Just like WeChat is about to begin, Alipay also kicked off a trial run of digital yuan payments. Furthermore, it is also worth noting that WeChat and Alipay pose potential competition to the digital yuan’s own native app. However, the added user number that Alipay brings to the table, alongside WeChat, far surpasses any figure that e-CNY may hope to hit on its own. In the words of Linghao Bao, an analyst at consultancy Trivium China:
“Chinese consumers are so locked in WeChat Pay and Alipay, it’s not realistic to convince them to switch to a new mobile payment app. So it makes sense for the central bank to team up with WeChat Pay and Alipay as opposed to doing it on its own.”
PBOC Eyes e-CNY as Currency of Choice for 2022 Winter Olympics
The PBOC’s primary motivating factor for pushing widespread adoption of the digital yuan could be the upcoming Beijing Winter Olympics. The 2022 edition takes place from February 4th to February 20th in Beijing. The games will also take place in the neighboring towns of Yanqing and Chongli. Therefore, having the digital yuan ready for the multi-sport event means that foreign travelers will be able to meet daily payment needs with it. Furthermore, according to the PBOC, these foreigners can do so without a local bank account.