China's central bank digital currency ranks high on WeChat

For the past few years, China's central bank has been trying to speed up the adoption of the digital yuan, or e-CNY, which is part of the country's monetary base. The bank has a designated e-CNY app that surpassed 261 million individual users by early 2022, but is also seeking help from the private sector to bring its official digital money to a broader user base.

WeChat, China's largest messaging app communicated on Wednesday that it expanded the use of e-CNY payments to transactions made through its short video and widget platforms, which together cover merchants from small influencers to brands promoting products on WeChat.

For those unfamiliar with WeChat, the Tencent-owned messenger is a sprawling empire that far exceeds what WhatsApp or Messenger can do. It comes with its own payment system, WeChatPay; supports millions of third-party lightweight apps, making it a rival to the App Store; has a short video network that competes with Douyin, the Chinese version of TikTok, for viewing time; and a host of other features that can easily be standalone apps, but Asia loves super apps.

In 2022, WeChat widgets generated several trillion RMB ($1 = RMB 6,9) of transaction value according to Tencent. Clearly, that sea of ​​microtransactions are potential targets for the digital yuan.

The new update is an expansion of the e-CNY payments option that WeChat has already supported since the beginning of last year. Only merchants that accept e-CNY will accept payments in the central bank's digital currency, according to the WeChat announcement.

Image: WeChat

While the central bank has established a network of e-CNY payment gateways at online and offline retailers in China, WeChat Pay and its rival Alipay, Alibaba's affiliated payment method, remain by far the digital payment methods. more ubiquitous.

El central bank regulator made it clear that the digital yuan it is not meant to compete with the two payment giants. Rather, it is supposed to play a complementary role.

For example, it could support anonymity for small value transactions just like physical cash. In other cases, large amounts of funds sent by a provincial government to a city could be paid in e-CNY to prevent corruption using the traceable capabilities of the digital currency.

The anonymity of the digital yuan is relative and applies only to the parties involved in the transaction. As with all other forms of Internet services in China, the digital yuan users must verify their real identities before using the wallet. To use e-CNY on WeChat, they need to link their real-name verified central bank wallet to WeChat Pay, which also authenticates their identities.

Let's say a user sees a pan they like in a short WeChat video that is also selling it, like how TikTok is trying to integrate commerce. At checkout, they will be directed to WeChat Pay, which is linked to their bank accounts, and now to the yuan digital wallet as well.