Last week Oliver Wyman published a paper on the digital yuan entitled, “A new dawn for digital currency. Why China’s eCNY will change the way money flows forever.” The document acknowledges that the central bank digital currency (CBDC) will focus on domestic applications in the near term. But it gets interesting when looking beyond that to cross border flows and B2B payments.
A key benefit introduced by the eCNY is the standardization and interoperability of payment networks. This challenges Ant’s Alipay and Tencent’s WeChat Pay duopoly status with their closed-loop networks and has a knock-on effect on merchant acquirers already impacted by the duopoly. Transaction fees will be squeezed further.
Most of the domestic benefits explored are ones that the Chinese state has already outlined, but it’s Oliver Wyman’s views on cross border payments that are worth exploring.
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