China’s WeChat starts accepting CBDC payments China’s WeChat starts accepting CBDC payments

China’s WeChat starts accepting CBDC payments

WeChat Pay currently has over 1 billion monthly active users and allows for CBDC payments only on certain apps.

China’s WeChat starts accepting CBDC payments

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

China’s most popular social networking application WeChat expanded its payment options by adding the country’s Central Bank Digital Currency (CBDC), according to Forkast News.

WeChat’s payment arm, WeChat Pay, currently has over one billion monthly active users, as reported by Forkast News. The platform only allows digital yuan payments for specific transactions, such as McDonalt’s orders and bill payments. WeChat is also expected to enable direct digital yuan transactions between its users in the near future.

With this decision, WeChat Pay became the second platform that supports the digital yen. The first platform was Alibaba Group’s Alipay application, while WeChat Pay is currently owned by Alibaba Group’s main competitor Tencent Holdings.

Adoption challenges

China’s digital yuan pilot phase was launched during the first week of 2022. At the time of writing, the digital yuan remains in its pilot phase in 26 Chinese provinces and cities.

A year after its launch, the digital yuan is still experiencing problems with adoption. In January, experts said the adoption problem could be solved if the digital yuan could be “usable on both WeChat Pay and Alipay.”

Chinese financial institutions are extending their efforts to increase digital yuan adoption. A few months after the digital yuan’s launch as a pilot program, six Chinese banks announced several CBDC-focused products and services to attract users and boost adoption.

Respecting privacy

The Chinese government continues its efforts to increase digital yuan adoption as well. On July 2022, a senior official from the country’s central bank made a public announcement to remind that the digital yuan respects users’ privacy.

According to him, the digital yuan has limited anonymity that only allows for reasonable anonymous transactions. He stated that using the digital yuan “prevents and combats illegal activities, including money laundering, terrorist financing, and tax evasion.”

China on crypto

Even though the country is still known for its anti-crypto stance, China gives importance to another crypto-related area beside the CBDCs: the metaverse. As of February, China has  seven provinces and cities that announced roadmaps to become the “main attraction for metaverse development and innovation.”

China’s capital Shanghai supports these endeavors, as the city launched a $149 million (1 billion yuan) metaverse fund at the end of 2022.