For the last few years, China’s central bank has been trying to ramp up the adoption of digital yuan, or e-CNY, which forms part of the country’s monetary base, M0. The bank has a designated app for e-CNY that crossed 261 million individual users in early 2022, but it’s also enlisting help from the private sector to take its official digital money to a broader user base.
China’s biggest messager WeChat said Wednesday that it’s extended the use of e-CNY payments to transactions happening through its short video and mini-app platforms, which together cover merchants from small influencers to brands touting products on WeChat.
For those unfamiliar with WeChat, the Tencent-owned messenger is a sprawling empire that far exceeds what WhatsApp or Messenger can do. It comes with its own payments system, WeChat Pay; supports millions of third-party lite apps, making it a rival to the App Store; has a short video network that competes with Douyin, TikTok’s Chinese version, for eyeball time; and a host of other features that can easily be standalone apps — but Asia loves super apps.
In 2022, WeChat mini apps generated several trillion RMB ($1 = RMB6.9) of transaction value, according to Tencent. Clearly, that sea of microtransactions are potential targets of the digital yuan.
Today’s update is an expansion of the e-CNY payments option that WeChat already supports since early last year. Only merchants that accept e-CNY will be taking payments in the central bank digital currency, according to WeChat’s announcement.
Image: WeChat
While the central bank has set up a network of e-CNY payment gateways at online and offline retailers across China, WeChat Pay and its rival Alipay, Alibaba’s affiliated payments method, are still by far the most ubiquitous digital payment methods.
The central bank regulator made it clear that digital yuan isn’t meant to compete with the two payments giants. Rather, it’s supposed to play a complementary role. As we reported previously:
For instance, it could support anonymity for small-value transactions just like physical cash. In other cases, large amounts of funds sent from a provincial government to a town could be paid in e-CNY to prevent corruption using the digital currency’s traceable capabilities.
Digital yuan’s anonymity is relative and applies only to the transacting parties involved. As with all other forms of internet services in China, digital yuan users have to verify their real identities before using the wallet. To use e-CNY on WeChat, they need to link their real-name verified central bank wallet to WeChat Pay, which also authenticates their identities.
Say a user sees a frying pan they like from a WeChat short video that happens to be also selling it — like how TikTok is trying to integrate commerce. At checkout, they will be directed to WeChat Pay, which is linked to their bank accounts, and now, the digital yuan wallet as well.
