China’s central bank digital currency, known as the digital yuan, is facing challenges in achieving widespread user adoption.
Charles Chang, director of the Fintech Research Centre at Fudan University in Shanghai, stated in an interview with the South China Morning Post that consumer hesitancy and competition from platforms like Alipay are significant obstacles.
Despite the potential of the digital yuan, popular payment platforms like Alipay and WeChat Pay have established loyal user bases. As Chang noted, persuading consumers to adopt a new payment method is challenging.
He acknowledged that Beijing faces “bottlenecks” in adopting the digital yuan. Nonetheless, he emphasized that the effort to promote the state-run currency will continue despite the corruption allegations against Yao Qian, the former head of the People’s Bank of China’s digital currency institute.
As previously reported, China’s mobile payment landscape is primarily dominated by WeChat Pay and Alipay despite the existence of approximately 185 non-bank payment institutions. The Chinese government encourages these leading payment platforms to reduce their market share to create space for the digital yuan.
Launched in trials across select cities in 2019, the digital yuan is a critical component of China’s strategy to establish itself as a global leader in central bank digital currencies.
Notably, China has introduced a new payment card for the digital yuan (e-CNY), unveiled at the 18th Shenzhen International Financial Expo on November 7. The card is 1 mm thick and features a display that shows transaction details, current balance, and dynamic QR codes for payments. It supports in-person and online transactions, offering “tap-to-pay” and “scan-to-pay” options and allowing merchants to accept payments through various devices. Additionally, China is working to integrate digital currencies globally, as evidenced by the launch of BRICS Pay on October 17 during the BRICS Business Forum in Moscow, which marked a key move to decrease reliance on the U.S. dollar.
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