China’s Central Bank: E-Commerce Platforms Should Integrate Digital Yuan as a Payment Option

China’s financial ecosystem could undergo a significant transformation with its new digital currency, e-CNY. This transformation includes a series of critical steps, ranging from the standardization of QR codes to financial licensing requirements, and could create radical changes in China’s retail payment systems.

Changchun Mu, Director of the Digital Currency Research Institute at the People’s Bank of China (PBOC), made significant statements regarding the future of China’s Central Bank Digital Currency (CBDC), known as e-CNY.

Digital Yuan to Fit All Retail Scenarios

According to Mu’s statements, PBOC’s primary goal is to make e-CNY available in “all retail scenarios.” This implies the usability of the digital yuan everywhere from shopping to restaurants, from transportation to online commerce. In a market where existing payment systems like WeChat Pay and Alipay, which use QR codes, are widespread, this is quite an ambitious target.

Standardization of QR Codes

Changchun Mu emphasizes that standardizing QR codes is a critical step for the broader acceptance of the digital yuan. “In the short term, we can begin by technically integrating QR code standards to ensure barcode interoperability,” he says. This standardization process will enable interoperability for all payment platforms, including WeChat Pay and Alipay.

For the digital yuan to gain large-scale acceptance, wallet providers and other payment platforms need to be compatible. Changchun Mu stresses that e-CNY operators need to pay attention to financial license requirements.

Integration with Existing Payment Systems

Changchun Mu points out that it is possible to achieve “seamless integration” between existing electronic payment tools, commercial bank deposits, and e-CNY. This implies that the digital yuan could be swiftly and efficiently integrated into China’s financial infrastructure.

The People’s Bank of China states that the existing interbank payment and settlement systems are functioning well, so there’s no need to replace them with the CBDC. However, it adds that e-CNY could effectively integrate with these systems.

China’s digital yuan has the potential to transform a market already dominated by platforms like WeChat Pay and Alipay. Through steps like standardization and compatibility, the People’s Bank of China aims to position e-CNY as a national and even international payment instrument. However, the timeline for the completion of this process and how the digital yuan will gain widespread acceptance remains an open question for now.

Source: The Block

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