China Deploys its Digital Token, e-CNY for Transportation
- China has a strong stance against crypto activities in its region but supports digital payments.
- The e-CNY pales in adoption when compared to Alipay and WeChat.
China, a leading player in the digital payment space, has formally launched the second phase of its central bank digital currency (CBDC) pilot test program. Several local sources revealed that residents of the city of Guanzhou can now pay for transportation using the digital Yuan, also known as e-CNY. Locals would have to download the e-CNY app, make a deposit and pay for their bus ride by scanning the QR code found in the bus payment area.
This news comes after Ningbo’s city government announced that residents could also use the e-CNY to pay for subway rides at 125 stations. Ningbo is the ninth Chinese city to introduce the e-CNY pilot test in its subway lines, allowing users to pay for their trips with a digital token.
The e-CNY has gained massive awareness in China since the year began, and the bulk of this growth can be traced to the token’s expanded utility. As a result, several Chinese cities have braced the CBDC in a bid to spread its adoption. Recently, residents in the city of Guangzhou became eligible to use the e-CNY to pay for housing fund contributions.
The government collaborated with the food delivery company Meituan and the e-commerce platform JD.com to develop e-CNY air-drops that can be redeemed at designated locations to boost consumer spending. As a result, over 6 million people have used e-CNY funds to order services on Meituan.
Can China’s e-CNY Compete Against Other Payment Providers?
China presently leads the race amongst countries launching their own CBDCs. Although several nations have launched CBDCs, the digital Yuan is widely adopted and most renowned. While the Chinese government holds a strong stance against crypto activities in its region, it appears to support the idea of a digital version of its currency.
However, users have seen little benefits to adopting the e-CNY in a nation where Tencent Holding’s WeChat Pay and Alipay are currently the two most popular payment methods. Last year, the e-CNY had a transaction turnover of 87.6 billion yuan. This was, however, miles away from the 118 trillion Yuan that Alipay alone boasted.
Regardless of this present disparity, Chinese authorities are pushing hard to increase awareness of the e-CNY. State-owned banks and other government organizations in China have also investigated new use cases for the e-CNY. For example, to incentivize adoption, the Suzhou branch of the Bank of China approved 3 million yuan in e-CNY loans for a cross-border e-commerce business, of which 1 million was utilized to cover railway freight costs.
To date, lotteries have been the primary method for motivating consumers to adopt the e-CNY. For example, residents of Shenzhen received 30 million yuan in e-CNY red packets in the months of May and June. These incentives will hopefully give the digital Yuan a competitive spot in the Chinese digital payment market.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
