Alipay Provides Digital Yuan Boost as COVID-19 Deals PBoC Blow
The e-payments giant Alipay, part of the Alibaba business empire, has added an advanced search function for users wishing to use its platform to make payments using the digital yuan within the fast-expanding pilot zone. The move comes as the People’s Bank of China (PBoC) looks to shore up domestic use of its sovereign digital currency after a series of high-profile setbacks, including a recent hack that saw $30 million worth of the e-CNY stolen from a PBoC-backed fintech company.
Alipay had previously added digital CNY pay options late 2021, while WeChat Pay followed suit earlier this year. WeChat Pay and Alipay have now both added buttons that direct users to digital yuan wallets, rather than requiring them to search through cluttered menus in a bid to find the payment option.
The push for wider digital yuan usage has coincided with a drop in the value of the Chinese currency, which has lost nearly 6% against the dollar since April. The PBoC has been selling US dollars and buying up yuan in a bid to support the currency, but the move has so far failed to halt its decline.
The central bank is now turning to the digital yuan as a way to boost the currency’s popularity. The move comes as China’s economy shows signs of recovery from the COVID-19 pandemic, with retail sales and industrial production both growing at faster-than-expected rates in May.
The PBoC is hoping that the digital yuan will increase the use of the currency both domestically and internationally. The central bank has been working on the digital currency for several years, but its launch has been delayed by concerns over its stability and security.
Alipay, one of China’s biggest payment platforms, announced last week that it would allow users to convert their yuan into digital currency. The Alipay interface update also allows users to create accounts using the same phone number they have registered with the e-pay platform – and pay for goods or services using the digital CNY without leaving the app.
China News Network reported that the Alipay digital yuan button prompts new users to rapidly set up accounts in the token via its MYBank neobank.
This follows a trend of private companies in China experimenting with digital currencies. Last month, e-commerce giant JD.com announced that it would launch its own digital currency, called the JD-Coin. The move was seen as a way to compete with Alipay and WeChat Pay, which control around 90% of the mobile payments market in China.
It is not yet known when the full rollout of the Alipay digital yuan will take place, but it is likely that it will happen in the next few months. The Chinese government has been working on a digital version of the yuan for several years, and has been testing it in various pilot programs.
The Ant Group claims that it has “pushed” some 6 million wallets onto merchants allowing them to accept digital CNY payments faster and more effectively.
The move is a significant one for the Chinese digital payments landscape and could have a major impact on the way that the country handles its finances. It also comes as the COVID-19 pandemic continues to ravage parts of the country.