TencentWeChat, the Chinese operator, is working with the People’s Bank of China (PBoC) to adopt the digital yuan (CBDC) and promote its interoperability. WeChatPay, together with its rival Alipay, has a 15% share in the Chinese Payments Market.
In 2018, Tencent began collaborating with the PBoC on CBDC technology. The company has been criticized for potentially competing with its own currency, as the digital yuan is still only a small fraction of the total yuan.
Last year, WeChat Pay added several options for electronic payments to its platform. In March 2021, the PBoC enabled users to pay with the digital yuan directly from the bank’s official app. In April, Tencent updated its own apps allowing users to make eCNY payments on various WeChat platforms, such as mini-programs, applets, and video accounts.
Tencent will be part of the PBoC’s multilateral central bank digital currency bridge project, Project mBridge, which includes the Bank for International Settlements (BIS) and central banks of Hong Kong, United Arab Emirates, and other countries. The prototype of mBridge will be available in 2022 with “real value” transactions between 20 commercial banks in four of the group’s territories.
In addition, Tencent plans to use CBDC Bridge to create a “multi-currency fund management” for small and medium-sized enterprises and to “further enhance its cross-border payment service capabilities”. The BIS is working on CBDC interoperability with central banks and private sector firms.
The PBoC insists that the digital yuan, WeChat Pay, and other private sector alternatives will one day complement each other. Meanwhile, the digital yuan is widely used during the Asian Games in Hangzhou, which is a major international showcase for the coin. The bank is also conducting cross-border trials with Hong Kong and Macau, and Russian politicians have suggested that the digital ruble could become compatible with the PBoC’s coin.
