How The Digital Yuan Is Used By Businesses & Institutions

How The Digital Yuan Is Used By Businesses & Institutions

The swift progress made on Digital Yuan (E-CNY) testing makes us optimistic that we may be able to witness the official release of a fully-operational Central Bank Digital Currency (CBDC) from China, sooner than expected.


CBDCs not only cut-off the expensive and tedious task of cash handling and maintenance for businesses, but also the entire monetary system of a country.


The detailed testing process for the Chinese government-backed digital currency is helping the People’s Bank of China (PBC or PBOC) and relevant authorities gather crucial information to help improve data security, increase payment efficiency and user privacy, and improve convenience of transactions.


The Digital Yuan is not a cryptocurrency like Bitcoin, Ethereum, or Cardano. It is a CBDC, and is not issued as “tokens”. According to the Digital Yuan White Paper the E-CNY “is a value-based, quasi-account-based and account-based hybrid payment instrument, with legal tender status and loosely-coupled account linkage.”.


More central banks around the world are delving into research around electronic central bank fiat money, programmable digital money, and the global purpose of CBDCs. Unlike risky decentralized cryptocurrencies, Central Bank Digital Currencies are centralized and can be duly regulated to protect the economy.


See Here Why China Chose A CBDC


How Is The Digital Yuan Used In Cities?


The number of E-CNY users, merchants, and transaction types has shown steady growth since its roll-out. In areas such as wholesale, retail, tourism, catering, and paying administrative fees, digital yuan payments have covered both online and offline scenarios. These examples are invaluable as it can give more insight into replicating and promoting new areas for E-CNY use.


Earlier this year, the Digital Yuan was rolled out in 10 of China’s major cities. Shanghai, Shenzhen, and the 2022 Winter Olympics site were among them.


By May 2022, 12 more cities were introduced to E-CNY payments.
Six cities in Zhejiang Province which will be hosting the 2022 Asian Games along with Zhangjiakou, Tianjin municipality, Chongqing municipality, Guangzhou in Guangdong Province, Fuzhou, and Xiamen.


One of the first cities to be given access to Digital Yuan payments, Guangzhou has implemented varied and novel E-CNY payment applications. It is being used in many scenarios from paying for parallel imported cars and granting talent subsidies, to supermarkets, transportation, online shopping platform transactions and more.


The checking machines in stations and passenger cars at the Guangzhou Haizhu District tramline now accept E-CNY payments. Since its introduction in April, at least 100 Digital Yuan payments have been made everyday.


How Is The Digital Renminbi Used By Businesses?


As we know by now, Tencent introduced Digital Yuan to its chat app, WeChat, in January 2022.
As part of the E-CNY’s A/B testing, users can make Digital Yuan payments through QR codes on WeChat.


Meituan introduced E-CNY payments for online food deliveries through its app. Later, the company expanded Digital Yuan payments to offline services such as hotels, restaurants, grocery stores and movie theaters.


Several banks in Shenzhen will team up with Meituan to E-CNY red packets worth 30 Million RMB (nearly 4.42 Million Dollars). Meituan’s Digital Yuan Pilot Project can help promote green, low-carbon monetary transactions through China’s digital currency.


Data collected by Meituan shows that at least 4 million users made Digital Yuan payments on Meituan platforms from September 2021 to May 2022. More than 5 Million E-CNY sub-wallets were pushed to the Meituan app.


Ant Group, formerly known as Ant Financial, is the fintech wing of the Alibaba Group, is also actively running testing on possible methods for using E-CNY.


Digital Yuan Use Outside Mainland China?


Hong Kong will be the first to roll-out a Digital Yuan pilot program outside of mainland China.
Plans are underway to implement E-CNY payments for shopping and dining transactions.


Why Would Businesses Choose Digital Yuan Payments Over Regular Transactions?


The reason for this is a simple case of total convenience. Money paid by customers can be transferred to business owners’ accounts in real-time with E-CNY payments.


Tencent’s Ongoing Digital Yuan Test Program


How Is Current E-CNY Testing And Its Future Prospects?


Right now, the designated operators for the Digital Yuan cover major Chinese banks, such as the Industrial and Commercial Bank of China (ICBC), China Construction Bank, and certain online banks.
There are currently discount campaigns and other payment benefits offered to users, possibly to promote the use of Digital Yuan among pilot city populations. This can help expand the PBOC’s dataset of E-CNY usage for the safe and orderly roll-out of Digital Yuan nationwide in the future.


As of May 2022, the Digital Yuan is still in its test stages and its use among a substantial population is crucial for the development of the CBDC.
Currently, there is growing trust among Chinese citizens around the Digital Yuan as a trustworthy mode of payment.


Right now, the designated operators for the Digital Yuan cover major Chinese banks, such as the Industrial and Commercial Bank of China (ICBC), China Construction Bank, and certain online banks.
There are currently discount campaigns and other payment benefits offered to users, possibly to promote the use of Digital Yuan among pilot city populations. This can help expand the PBOC’s dataset of E-CNY usage for the safe and orderly roll-out of Digital Yuan nationwide in the future.


As of May 2022, the Digital Yuan is still in its test stages and its use among a substantial population is crucial for the development of the CBDC.


Currently, there is growing trust among Chinese citizens around the Digital Yuan as a trustworthy mode of payment.


Watch How Guangzhou Citizens Are Embracing Use Of E-CNY


According to the white paper issued by the PBOC on the Digital Yuan


“An e-CNY system will make financial services more accessible, providing fiat money for a large population in various scenarios. Those without bank accounts can enjoy basic financial services provided via e-CNY wallet, and foreign residents temporarily travelling in China can open an e-CNY wallet to meet daily payment needs without opening a domestic bank account. In addition, as e-CNY is settled upon payment, businesses and related parties can improve cash flow while enjoying more convenient payment services.