20 May 2020 · 2 min read

Digital Yuan ‘Highly Likely’ to Be Compatible with Alipay, WeChat Pay

Experts in China and South Korea believe that China’s digital yuan will likely be interoperable with e-pay solutions like WeChat Pay and the Alibaba-operated AliPay, as well as a number of digital platforms used by major banks.

Source: Adobe/Heorshe

The People’s Bank of China (PBoC), the Middle Kingdom’s central bank, has remained relatively tight-lipped on the matter of private sector app-interoperability for the forthcoming digital currency, known locally as the DCEP. Furthermore, Chinese internet user-shared images appear to show testbed users using digital yuan holdings kept in new smartphone wallet apps issued by Chinese state-owned banks.

However, a research specialist named Im Dong-min, at South Korean financial giant Kyobo Securities, told media outlet Chosun,

“WeChat Pay and Alipay are widely used in China, and the DCEP is highly likely to be used in conjunction with [these platforms]. As the banking sector is largely state-run in China, it will be easier to roll the DCEP out without causing inconvenience.”

In China, Monet Carlo, a regular contributor at a number of leading Chinese tech media outlets wrote, in a column published by Mars Finance, that the DCEP would probably not make use of a single app – but would instead be built around the idea of interoperability.

The columnist wrote,

“In the future, with the DCEP, you will no longer need to rely on using a range of specific apps. That is to say, if you want to receive funds, you will no longer need to have multiple apps from Alipay, WeChat and [various state-owned banks] – it will suffice to just have one of these. For example, if you have installed the Alipay app, you can scan a code from a WeChat Pay account and proceed with a direct DCEP payment. The same goes for banks and other third-party platforms.”

The columnist backed up their claims by pointing out that the PBoC has already suggested that interoperability could be one of its main goals with the DCEP, stating last year (as reported by Tuolo Caijing),

“No matter where or when a transaction occurs between two parties, as long as the parties’ mobile phones are installed with an app that supports the Chinese DCEP wallet standard […] transactions can be executed.”

The same PBoC statement claimed that this interoperability could even be extended to app-agnostic transactions made between smartphone users in foreign currencies, with “real-time exchange rate” exchanges to RMB.

Observers elsewhere believe that the DCEP represents the culmination of a joint public-private sector push aimed at ending dollar dominance in Asia.

Last month, New York-based enterprise blockchain architect Biser Dimitrov stated that both Alibaba and Tencent (the tech giant that runs WeChat) are “working directly” with the PBoC on the digital yuan, and claimed,

“The ultimate goal is to enable and establish the PBoC and large Chinese enterprises like Tencent, Huawei, Baidu and [Alibaba affiliate] Ant Financial as the world leaders in new-breed payments infrastructure with unique features.”