Much has been made of the forthcoming digital yuan – China’s central bank digital currency – and its potential threat to the United States dollar, but a China watcher is saying that the token will first need to displace the likes of Alipay and WeChat Pay at the top of the domestic e-pay tree.
Alipay is the e-pay arm of the e-commerce giant Alibaba, while the tech and entertainment heavyweight Tencent operates the WeChat ecosystem and its WeChat Pay arm. Together, the two have cornered 15% of the entire Chinese payments market and 95% of the digital payments sector.
The digital CNY, the brainchild of the central People’s Bank of China (PBoC), will look to challenge that. And speaking to CNBC, Martin Chorzempa of the Peterson Institute for International Economics, claimed,
Meanwhile, the Financial Times reported yesterday that the planned ‘e-yuan’ could boost Beijing’s surveillance state and create competition for private fintech groups.
“The wide use of the digital renminbi will affect the market position and profit model of third-party payment platforms like Alipay and WeChat pay,” Wang Yongli, a former vice-president of Bank of China, one of China’s largest state-owned banks, was quoted as saying in the report.
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