For the past several years, China’s central bank has been trying to accelerate the adoption of the digital yuan, or e-CNY, which is part of the country’s monetary base, M0. The bank has a designated app for e-CNY that crossed 261 million individual users in early 2022, but is also enlisting help from the private sector to bring its official digital money to a broader user base.
WeChat, the largest messenger in China saying on Wednesday that it extended the use of e-CNY payments to transactions made through its short video and widget platforms, which together cover merchants from small influencers to brands promoting products on WeChat.
For those unfamiliar with WeChat, the Tencent-owned messenger is a sprawling empire that far exceeds what WhatsApp or Messenger can do. It comes with its own payment system, WeChat Pay; supports millions of third-party lightweight applications, making it a App Store Rival; has a short video network that competes with Douyin, the Chinese version of TikTok, for watch time; and a host of other features that can easily be standalone apps, but Asia loves super apps.
In 2022, WeChat widgets generated several trillion RMB ($1 = RMB 6.9) of transaction value. according to Tencent. Clearly, that sea of microtransactions are potential targets for the digital yuan.
Today’s update is an expansion of the e-CNY payments option that WeChat has already supported since early last year. Only merchants that accept e-CNY will accept payments in the central bank’s digital currency, according to the WeChat announcement.
Image: WeChat
While the central bank has established a network of e-CNY payment gateways at online and offline retailers across China, WeChat Pay and its rival Alipay, Alibaba’s affiliated payment method, remain by far the largest. more ubiquitous digital payment methods.
The central bank regulator has made it clear that the digital yuan is not meant to compete with the two payment giants. Rather, it is supposed to play a complementary role. Like us reported previously:
For example, it could support anonymity for small value transactions just like physical cash. In other cases, large amounts of funds sent by a provincial government to a town could be paid in e-CNY to prevent corruption using the traceable capabilities of digital currency.
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