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China’s digital yuan puts Ant and Tencent in an awkward position



The People’s Bank of China , in recent months, has accelerated the experimentation of its digital Yuan , putting the Alipay and WeChat Pay operators in difficulty and leaving these companies with no choice but to participate.

The strong risk, however, is that of eroding the huge user base that they have built up over the years; in fact, most of the 1.4 billion Chinese use at least one of the two services to make mobile payments.

Last week, the PBOC said the e-CNY was developed primarily for domestic payments by individuals, adding that China needs “more convenient, secure, inclusive and privacy-friendly” payment services and infrastructure. payment system that is interoperable between platforms.


The PBOC later also added that the e-CNY would be distributed through approved commercial banks and non-bank payment companies, thus giving banks a head start in its digital Yuan pilot projects through the exploitation of six state-owned lenders in a test of the e-CNY wallets earlier this year.

Ant’s MYbank and Tencent’s WeBank later became participants, but the two virtual banks have so far not been allowed to run full-blown testing like state-owned banks have done.

Internally, however, Ant Group performed unofficial tests.


Using digital wallets embedded in the Alipay app, employees shopped with e-CNY at dozens of restaurants, vending machines and retail stores on the two companies’ campuses in Hangzhou and other Chinese cities.

Employees were also able to use the digital Yuan, withdrawn from their accounts at state-owned banks or MYbank, to pay for some online services and goods at Alibaba-backed businesses and resellers.

The digital Yuan pilot project has also sparked concern from Ant Group that Beijing is starting to dismantle the Alipay mobile payment system, used by more than a billion people in China.


These concerns, coupled with the company’s determination to proceed with the test, show that Ant is trapped between a rock and a hard place.

The central bank has said that e-CNY and other electronic payment methods complement and differ from each other, and the main difference is that e-CNY is legal tender.

The PBOC said in the white paper that there is no timeline for a nationwide launch, contrary to previous indications that the central bank was aiming for an official launch by the 2022 Winter Olympics in Beijing.


The process currently covers 10 cities, as well as some locations related to the Olympic Games.

According to the white paper, approximately 20.87 million individual and 3.51 million corporate e-CNY wallets had been created by the end of June, leading to 70.75 million transactions worth more than 5 billion.

About Giuseppe Pascarella:


Giuseppe Pascarella is a financial analyst and founder and CEO of the PascaProfit group, one of the leading Italian and European companies in the field of analytics.

Often guest of important meetings with prominent personalities such as Christine Lagarde (number 1 of the ECB) and Ursula Burns (former Obama consultant), he is also active in promoting financial literacy in Italy through the books “Beat the Benchmark” and “Where I put my money “.

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