Digital Currency Electronic Payment: Not A Warning Sign For Alipay And WeChat Pay

Moreover, both companies are gradually adopting a 2B-dominant business structure with decreasing emphasis on retail payments. In other words, the retail payments business is more traffic-generating and might have fewer profit contributions, while the 2B sector is likely to account for most of the income.

Waiting time will be longer for a full implementation

Concerns emerged from the launch of DCEP regarding its substitution mission vis-a-vis traditional cash.  Even if it happens, it will take longer than expected. We will discuss the problem from its essential elements:  the Digital Currency (DC), which refers to the digital yuan, and its distribution method, the Electronic Payment (EP).

DC can only supplement cash in circulation. In the near future, complete coverage of digital currency is still under debate due to the economic disparity in different Chinese regions. Internet coverage and access to mobile devices are still a problem in some regions. Another aspect relates to the age group. Commonly, the elder population in China tends to devoid intelligent devices in their daily lives, rarely using e-payments.

Secondly, as a non-interest paying account, digital currency is less competitive than real deposit accounts. As the digital yuan is designed to replace the physical cash in people's pockets, which is already reduced, it will be even harder to persuade the public to transfer their money out of interest-generating accounts to DCEP.

Speaking of EP, its negative impacts on third-party payment platforms are not as threatening as expected, even though they function in the same way. Beyond having an identical nature in the realm of e-payments, DCEP does work perfectly without Internet coverage. While for people holding smartphones, off-Internet scenarios are occasional. The digital currency gives no strong reason for why the Chinese public will quit their previously used e-payment methods. 

Furthermore, Alipay and WeChat Pay, which combined occupy 95% of the e-payment market in China, rely on their huge partnership networks. These two giants' widened cooperation obscures DCEP to obtain merchants' coupons and discounts, making it less attractive to the general public.

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Disclaimer: Please consult your own advisor before making any investment decision. 

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