China’s central bank digital currency (CBDC) is currently in the test phase, with screenshots recently circulated. There’s been some discussion in the Chinese press about how the digital yuan might impact the two dominant wallets WeChat Pay and Alipay.
To give a sense of just how substantial these players are, Tencent, the parent of WeChat Pay, recently published its annual results. In 2019 Tencent’s FinTech division processed an average of one billion payment transactions PER DAY, had 800 million active users and 50 million active merchants.
It’s also thought that both WeChat Pay and Alipay are involved at the distribution end of the digital renminbi. The digital currency has a two tier structure in that the currency is issued by the central bank to the major commercial banks, much like happens with cash. The banks then distribute the digital yuan and from there on, the currency will circulate and can even be transferred p2p offline.
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