WeChat will reportedly begin offering support for China’s central bank digital currency (CBDC), the digital yuan.
Owned by Tencent, China’s largest messaging app, with over 1 billion users, is also among the country’s most used payment services. Known as a “super app,” WeChat enables a host of additional services besides messaging, including WeChat Pay, which has over 800 million active monthly users. Such a large user base could be a boon for the adoption of the sovereign digital currency.
The digital yuan’s spreading use
Although China has been developing the digital yuan since 2014, so far it has only limited trial usage of the technology to those selected by lottery in certain cities. Now, despite lacking an official rollout date, the People’s Bank of China, which issues the CBDC, seems to be looking to expand the usage of the digital yuan.
Earlier this week, the PBOC launched a digital yuan app in select regions and cities, which is now open for use to anyone living in those areas. In addition to WeChat Pay, Ant Group-owned Alipay began trials with digital yuan payments last year. Although they pose competition for the PBOC’s own digital yuan app, the two firms dominate mobile payments in China and would certainly facilitate the wider use of the digital currency.
“Chinese consumers are so locked in WeChat Pay and Alipay, it’s not realistic to convince them to switch to a new mobile payment app,” consultancy Trivium China analyst Linghao Bao told CNBC. “So it makes sense for the central bank to team up with WeChat Pay and Alipay as opposed to doing it on its own.”
In addition to consumer applications, China seems poised to broaden the scope of the digital currency’s usage. Casino operators in Macau will soon have to renew their licenses for the first time in 20 years. Regulators in China are expected to take advantage of the situation by compelling them to allow the experimental use of the digital yuan in their casinos. Late last year, it was reported that China was considering launching a digital yuan-based exchange in Beijing.
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