China moves a step closer to facilitate the adoption of its central bank digital currency (CBDC) as WeChat Pay integrates the digital Yuan app for faster payments. WeChat Pay is a popular Chinese mobile payment and digital wallet service that allows users to make mobile payments and online transactions.
According to local media, the platform is used by the majority of the Chinese population and now with the addition of the digital Yuan app, it will help in boosting its adoption.
Sources reveal that at the moment users can use the app to make payments with their CBDC wallets in WeChat’s mini-programs. The app is expected to undergo developments and see the addition of more use cases and payment scenarios in the future. Currently, there is a transaction limit which is fixed at 2,000 Yuan ($289) whereas the daily limit is 5,000 Yuan ($720).
Notably, this is yet another step forward by Chinese officials to expand the use of their CBDC. The country’s central bank and other financial entities have ramped up their efforts in this initiative and are enthusiastic on expanding the CBDC tests quickly. The CBDC trial programs so far have covered about 15 provinces, with many tens of millions of digital yuan wallets activated. However, this is only the beginning of the process to make the service go nationwide, as there are many citizens to bring on board.
China has been very sincere in its efforts to expand and accelerate the payment avenues for the digital Yuan. In December last year, Alipay became the first payment application to announce that it had linked the digital Yuan app, offering itself up as an express payment option for Alibaba’s e-commerce platforms. This allowed users to buy products and services using the CBDC on those platforms.
This move from WeChat opens doors for massive improvements in the digital Yuan app. The former has over 1 billion users, and bringing these on board via WeChat could give the Chinese CBDC the adoption it is looking forward to.
While there are still many more users to attract, the CBDC is still seeing growth. The Spring Festival holidays saw local governments offer citizens coupons in the form of digital yuan in a bid to boost adoption. Other occasions have also seen China handing out digital yuan, mostly in the form of airdrops.
However, the results are apparently as desired. In December, a former Chinese central banker expressed his dissatisfaction with the stats of digital Yuan usage in the nation. He mentioned that as of October, the cumulative digital Yuan transactions had only crossed over 100 billion Yuan ($14 billion). He also said that October marked two years of the launch of the CBDC, and hence “the results are not ideal.” In addition, he commented that the “usage has been low, highly inactive.”
Keeping such figures in mind, the Chinese cities are determined to bring overwhelming changes to their CBDC adoption. Last month, the Chinese city of Suzhou unveiled its new plan to promote the adoption of digital Yuan (e-CNY). The city intends to transact about $297 billion worth of the central bank digital currency (CBDC) this year. According to local media reports, the Suzhou authorities aim to achieve the goal of digital Yuan transactions involving residents and enterprises, with the targeted value projected to grow six-folds.