This weekend, the two Chinese fintech giants Ant Group and Tencent prominently displayed posters during the Digital China Summit outlining a “history of cooperation with the PBoC on the digital yuan” according to the South China Morning Post.
The Post reports that this is the first time that Ant Group has disclosed a detailed timeline of its work on China’s digital currency, which stretches back to 2017. A poster explained that Ant Group was first invited to join the research and development of the digital yuan and that the Ant-backed online bank MYBank became one of the operational institutions offering the digital yuan.
During 2019, the Digital Currency Research Institute reportedly began using the Group’s mPaas platform to develop its app, and by late 2020 the fintech had deepened its works with the Institute on several projects, including the OceanBase database. A poster showed that Ant Group launched a digital yuan trial in Shanghai in December 2020, which this year saw continued roll out in different parts of the country across a number of industries at the start of 2021.
During the Summit, the Digital Currency Research Institute of the PBoC told attendees of the signing of a technical strategic cooperation agreement with Ant Group to progress with building a technical platform for the digital yuan.
The suspension of Ant Group’s plans for a gargantuan dual-listing in Shanghai and Hong Kong in December 2020, is believed to have signalled a turning point on its stance toward Chinese technology giants and fintechs.
Tencent’s posters displayed during the Summit showed that it has also been involved in the digital currency tests from February 2018, with a team of experts formed by November of that year. A Tencent representative said “Tencent has been taking part in the PBoC’s e-CNY project from the start, and will continue to carry out pilot trials in accordance with the guidance of the PBoC.”
This is a particularly interesting update, as earlier this month Reuters reported that six large stage banks in Shanghai were quietly promoting digital yuan ahead of a shopping festival on May 5, “carrying out a political mandate to provide consumers with a payment alternative” to Ant Group’s Alipay and Tencent’s WeChat Pay.
While publicly supportive of the PBoC’s work on a digital yuan, Reuters commented that “in private, state banks marketing the digital fiat currency for the central bank bluntly describe Beijing’s intention to undercut the duo’s dominance.”
Additionally, the Reuters article continues that digital wallets which are still being beta tested can be bundled with dozens of popular apps in China including JD.com, Didi, Bilibili, and Meituan, but “conspicuously can not be linked to WeChat or Alipay.” Meaning that none of the participating banks can transfer e-CNY between their digital wallets and the two payment platforms.
Reportedly the PBoC doesn’t want to see the money being routed through third-part payment systems, with with the e-CNY seeking to digitise the ‘last mile’ of consumption so that banks and merchants can capture valuable data and gain insights into spending patterns.
Alipay and WeChat Pay currently control a combined 94% of China’s online payment market and the data that comes with it.