Analysts: “China’s digital currency could reduce popularity of Alipay and WeChat Pay”

The six largest banks in China are actively promoting the state cryptocurrency as a payment instrument. Analysts believe the digital yuan threatens Alipay and WeChat Pay.

Ahead of the online shopping festival on May 5, the country’s six largest banks are promoting the People’s Bank of China (PBOC) digital currency in Shanghai. Banks are urging retailers and consumers to download a digital wallet and shop with the digital yuan.

Among the banks involved in promoting China’s state cryptocurrency, the country’s largest lenders are Commercial Bank of China, Agricultural Bank of China, Bank of China, HSBC and China Construction Bank.

According to analysts, the use of the digital yuan for payments could reduce the popularity of other payment methods preferred by millions of shoppers – Alipay and WeChat Pay.

A bank clerk working to launch a digital yuan test in Shanghai under the leadership of the NBK described digital currency as superior to Alipay and WeChat Pay:

“People will understand that electronic payments in RMB are so convenient that they no longer need to rely on Alipay or WeChat Pay.”

Chairman of the Digital Currency Research Institute at the NBK Mu Changchun said in late March that Alipay and WeChat Pay account for 98% of the mobile payments market in China. This creates risks for the internal financial system in the event of problems in companies.

Changchun noted that the Central Bank does not plan to directly compete with Alipay and WeChat Pay, but will act as a fallback to “ensure financial stability in case something happens” with payment systems.

The launch of the digital yuan will allow the Chinese government to gain control over some of the huge financial data that is accumulated by the country’s leading payment systems.

“Big data is wealth. Whoever owns the data thrives, ”said another bank clerk working to promote the digital yuan. “WeChat Pay and Alipay own a huge amount of data.”

Earlier this month, it was revealed that the People’s Bank of China will provide an opportunity for tourists and foreign athletes to test the digital yuan during the 2022 Winter Olympics.

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