This was the view of Peng Wensheng chief economist at China Everbright Securities.
If it’s free for merchants to accept the DCEP, whereas Alipay and WeChat Pay charge merchants a fee, then merchants could favor the DCEP, according to a report today in the China Securities Journal.
So the question is, how or why could this negatively impact the two big wallet providers? The banks then distribute the digital yuan and from there on, the currency will circulate and can even be transferred p2p offline.Īlso known as the digital currency / electronic payment ( DCEP), we speculate the currency would sit in the Alipay and WeChat Pay wallet alongside other balances. The digital currency has a two tier structure in that the currency is issued by the central bank to the major commercial banks, much like happens with cash. It’s also thought that both WeChat Pay and Alipay are involved at the distribution end of the digital renminbi. In 2019 Tencent’s FinTech division processed an average of one billion payment transactions PER DAY, had 800 million active users and 50 million active merchants.
To give a sense of just how substantial these players are, Tencent, the parent of WeChat Pay, recently published its annual results. There’s been some discussion in the Chinese press about how the digital yuan might impact the two dominant wallets WeChat Pay and Alipay. China’s central bank digital currency ( CBDC) is currently in the test phase, with screenshots recently circulated.