A smart phone with the icons for the social networking apps WeChat and others seen on the screen on June 29 2018 in Hong Kong, Hong Kong.
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Tencent-owned WeChat, China’s largest messaging app and one of the country’s biggest payment services, will begin supporting the country’s sovereign digital currency.
China has been working on the digital yuan since 2014 and is yet to roll it out nationwide. But the move by WeChat, which has over 1 billion users, to support the digital currency could provide it with a huge boost if people begin to pay with it.
WeChat may not be that well know to users outside of China, but inside the world’s second-largest economy it is ubiquitous. It is often dubbed a “super app” because many services are wrapped into it. People can use messaging functions and make payments via WeChat Pay, but also hail taxis and order food.
WeChat Pay allows users to show merchants a barcode on their phone to pay for items in store. It can also be used for purchases online. WeChat Pay has over 800 million monthly active users.
To date, the People’s Bank of China, which issues the digital yuan or e-CNY, has done limited trials in certain cities via lotteries where the central bank has handed out small amounts of the currency to some citizens.
But there are now signs that the PBOC is looking to expand usage of the digital yuan, despite no concrete date for a nationwide rollout. This week, the PBOC launched an e-CNY app for users in certain regions and cities in China. That will enable anyone in those areas to download and sign up to use the digital currency. Previously, users could get the app on an invite-only basis.
In China, WeChat and Alipay, which is run by Alibaba affiliate Ant Group, dominate mobile payments; last year, Alipay also began trialing digital yuan payments. But WeChat and Alipay are also potential competitors to the digital yuan’s own app.
Now, with WeChat planning to roll the e-CNY out and Alipay on board too, the PBOC will have more chance of getting citizens to use the digital currency.
“Chinese consumers are so locked in WeChat Pay and Alipay, it’s not realistic to convince them to switch to a new mobile payment app. So it makes sense for the central bank to team up with WeChat Pay and Alipay as opposed to doing it on its own,” Linghao Bao, analyst at consultancy Trivium China, told CNBC.
The potential expansion of e-CNY usage comes ahead of the Beijing Winter Olympics this year. The PBOC has been targeting having the digital yuan ready for the event in the Chinese capital.