- New digital yuan is a ‘game-changer’ for the world’s second biggest economy, according to experts.
- As contactless payments become the norm amid the worldwide pandemic response, China rolled out its digital currency this month in four cities.
- The companies, as well as the Chinese government, see digital payments not as a goal in itself but as an entry point to a vast ecosystem of both offline and online goods and services.
- The digital yuan is a currency that behaves much like normal cash, but exists only as code in a digital wallet, backed by the People’s Bank of China.
A recently published article in The National, written by Kelsey Warner, reveals the present situation on how China deals with the contactless payment. With the pandemic still being felt across the world, officials believe the worst appears to be over in China, and measures are being rolled out to revive the world’s second-biggest economy.
Contactless payment
As contactless payments become the norm amid the worldwide pandemic response, China rolled out its digital currency this month in four cities, setting it up to become the world’s first cashless society.
The digital yuan is a public-private initiative, being tested in Shenzhen, Suzhou, Xiongan and Chengdu by franchisees like McDonald’s and Starbucks, and other local businesses. It is a “game-changer” in financial services, Nameer Khan, chairman of the Mena FinTech Association, told The National, for a country that badly needs a break.
Digital payment an entry point
The companies, as well as the Chinese government, see digital payments “not as a goal in itself but as an entry point to a vast ecosystem of both offline and online goods and services – and they are using the data generated to transform financial services as well as the physical retail industry”, CGAP found. Mass uptake is enabled by the country’s widespread bank account and smartphone ownership.
So far, 20 countries are officially working on central bank-backed digital currency projects around the world, adding to a growing sense of an emerging competition. China is at the head of the pack.
Digital coupons
Since last month, digital coupons have been loaded up on Chinese smartphones to encourage spending in restaurants and grocery stores by local government leaders. In Wuhan, for example, about $10 per citizen has been distributed via point-of-purchase apps like WeChat and Alipay.
“Digital coupons allow the Chinese government to trace the usage of these coupons,” Dr Shirley Yu, an expert on China’s economy and visiting fellow at the London School of Economics, told The National. She noted that cash, as distributed by the US government recently, “does not allow traceability”.
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Source: The National
