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

Will DCEP entirely replace the bills through its full implementation? It seems to be wishful thinking for now.

A 'partnered' future

The future position of DCEP and other providers is mainly determined by the market demand. Meanwhile, the intense competition evoked the transformation of other payment providers, posing a major threat to DCEP.

But cooperation scenarios between the new system and the local payment service providers is also possible. For example, the third-party digital payment platforms might act in parallel with the banks to distribute digital yuan issued by the central bank, and still play an important role in the payment market.

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Also, as we illustrated before, the digital yuan will only partially replace the M0, or cash in circulation (like bills and coins). The money in Alipay and WeChat Pay is the deposits, which has more extents than the digital yuan. They are not perfectly interchangeable.

Many private banks are likely to join the pilot programs of DCEP, including Ant Group's MYbank and Tencent's WeBank. And there is more space for mutual development of the state project and the local private sector players. Most of the concerns regarding DCEP's adverse effect on Alibaba and Tencent's businesses are pointless.

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