Yesterday China’s pilot digital yuan was enabled in WeChat Pay, the payment wallet of the largest social network in the country. China’s central bank digital currency (CBDC) can now be used for faster payments not only in the WeChat app but in several WeChat mini programs. Additionally, the digital yuan is being promoted in Hong Kong for limited use cases.
The digital yuan or e-CNY is usually linked to a bank wallet. So to use the digital yuan in WeChat, the two wallets must be synchronized, which also means the same phone number must be used in both.
One of the stated objectives of the CBDC was to enable interoperability between separate payment apps. The dominant ones are Ant’s Alipay and WeChat Pay. Chinese news outlet The Paper reported that WeChat Pay also supports the digital renminbi wallet of MYbank which is associated with competitor Alipay.
Digital yuan in Hong Kong
Hong Kong’s usage of the digital yuan was first trialed in early 2021 for Hong Kong residents visiting mainland China. More recently, the range of scenarios has been expanded, including mainland e-commerce purchases by Hong Kong residents.
For example, a limited number of whitelisted Hong Kong users can buy goods from online retailer JD.com, China’s equivalent of Amazon. JD was involved in the very first trials of the digital yuan in mainland China as the first online outlet to accept the digital currency.
There’s a promotion for Hong Kong users who receive 25 yuan for every 100 yuan they spend at JD.com through a collaboration with the state-owned commercial Bank of China and Bank of China (Hong Kong).
Additionally, vending machines were launched, offering eCNY hardware wallets similar to prepaid cards. There wasn’t a massive takeup, with 625 wallets bought in the first four days of availability. That’s despite a 20% discount being available on purchases at 1,400 outlets in Shenzhen’s Luohu district when payment is made with the eCNY.
Meanwhile, China and Hong Kong are participants in an interbank multi-CBDC initiative for cross border payments, Project MBridge. With the BIS and the central banks of Thailand and the UAE also involved, the project is progressing toward production.