SHANGHAI (Reuters) – China’s digital currency debuted in app stores to much fanfare, with online wallets for the electronic yuan gaining mass adoption within two weeks of its public launch, but actual use in transactions was much less impressive.
The People’s Bank of China (PBOC) is ramping up testing of the digital currency, dubbed e-CNY, ahead of the Winter Olympics in Beijing next month. But e-CNY usage is still limited to 10 major “pilot” cities and hampered by people’s preference for Ant Group’s Alipay and Tencent’s WeChat Pay, which dominate online payments in China.
The e-CNY is one of the first sovereign digital currencies to be launched, putting the PBOC at the forefront of a global race to develop central bank digital currencies.
On January 4, PBOC released its e-CNY wallet app on mobile phone app stores, attracting strong public interest.
The digital wallet became the most downloaded free app on Apple’s iOS app store in China on Jan. 8, staying there for five consecutive days, and has been downloaded more than 2.5 million times, according to the research consultancy Sensor Tower. Previously, e-CNY wallets could only be opened through certain banks.
Still, the use of e-CNY is limited to the 10 major cities where pilot programs are being launched, such as Shanghai and Shenzhen, as well as the site of the Winter Olympics, where China hopes to show the influence of the digital yuan to overseas visitors to the event.
Howard Mao, a student at Shanghai University, said he downloaded the wallet, but barely uses e-money.
“There are still not many application scenarios for e-CNY in daily life, and many merchants do not accept it,” said Mao, who still relies on Alipay and WeChat Pay. .
The gap between busy wallet downloads and lukewarm acceptance is also captured by official data.
From July to October last year, the number of individual e-CNY wallets increased almost sevenfold, reaching 140 million, equivalent to one-tenth of China’s population.
On the other hand, the cumulative value of transactions increased by 80% to reach 62 billion yuan (9.77 billion dollars). Alipay’s monthly payment transaction value averaged nearly 10 trillion yuan, Ant revealed in 2020.
“It takes time for people to start accepting e-CNY, given the ingrained payment habits,” said G. Bin Zhao, senior economist at PwC China.
But authorities have many ways to promote mass adoption, such as prioritizing the use of e-CNY in paying water, electricity and medical bills, he said. declared.
“A small push from the government will make a big difference.”
e-CNY is currently accepted by internet giants, including JD.com, Meituan and Trip.com, and can also be used online to buy airline tickets or pay mobile phone bills. A Chinese central banker said in November that 1.55 million merchants could accept payments using e-CNY wallets, including utilities and catering.
“The development of the digital yuan has reached critical mass,” said Zou Chuanwei, chief economist of Wanxiang Blockchain.
The application scenarios of e-CNY, which mainly concerns the retail space, will be gradually expanded to include financial asset transactions, cross-border trade and payments, and “the innovation margin is huge,” Zou said.
($1 = 6.3463 Chinese yuan renminbi)
(Reporting by Samuel Shen, Brenda Goh and Jason Xue; Editing by Vidya Ranganathan and Ana Nicolaci da Costa)