China has been one of the leading countries in terms of digital payments. WeChat and AliPay are – were – the most common modes of payment. The Chinese government recently launched a digital yuan – e-renminbi which is expected to take over all other payment methods. The digital yuan had also been speculated to cripple cryptocurrency dominance in the country.
Ant Group’s AliPay and Tencent’s WeChat Pay had maintained a duopoly in the country over the digital payment sphere. However, with the launch of the new digital yuan by the Chinese government the dynamics are expected to shift soon.
Being launched by the government, the digital yuan also enjoys the support of major institutions which will boost its adoption like wildfire in no time. In Shanghai, six state banks are actively promoting the digital yuan ahead of a shopping festival on May 5. The banks are persuading their clients to download the digital wallet. The digital yuan is said to be much more convenient than AliPay or WeChat Pay, people just need to realize that by using it. Shanghai is still in the pilot stage of the rollout of the digital yuan.
The digital yuan’s rollout is a part of the Chinese government’s clamp down on the internet. The Chinese government had been skeptical of cryptocurrencies as well as the increasing dominance of WeChat Pay and AliPay. The People’s Bank of China has called mobile payment dominance a posing risk to the financial system. Hence, the digital yuan serves as a solution.
China is the first major economy to take an initiative towards a sovereign digital currency. Once the pilot phase is completed, the success of the project will set new precedents for countries all over the globe and will propel global digitization.