Ant-backed MYbank will join China’s digital yuan trial as the central bank charges ahead with rolling out an electronic currency system that could uproot the country’s payments landscape.
MYbank’s service will soon be introduced to the People’s Bank of China’s digital yuan app, people familiar said, requesting not to be identified because the matter is private. Tencent-backed WeBank will also participate, one of the people said. The e-wallets from the two firms will have exactly the same functions as those from the six state-owned lenders in the trial, said the person.
Adding the two banks to the pilot will help China’s central bank expand its influence and user coverage in its push to establish the first digital national currency from a major central bank. When the People’s Bank of China first announced its plans, it was viewed by some as a government move to reclaim the 293 trillion yuan ($45 trillion) payments industry from to Ant Group Co.’s Alipay and Tencent Holdings Ltd.’s WeChat Pay.
As one of the parties participating in the research and development of PRC’s e-CNY, MYbank will “steadily advance the trial pursuant to the overall arrangement of the People’s Bank of China,” the company said in an emailed response without elaborating. WeBank declined to comment in an emailed statement. The PBOC didn’t immediately respond to a fax seeking comment.
In China, smart-phone-based electronic payments are ubiquitous, used for everything from bus-rides and convenience stores to vegetables at the local market — and 94% of those mobile transactions are controlled by the two firms. Yet the tech giants are facing tougher times ahead under President Xi Jinping’s government, which has already stepped up oversight of the fintech industry and unveiled tougher antitrust regulations for the internet arena. The digital yuan is being rolled out at a time when China is trying to curb monopolies in the payment space, potentially dealing a blow to Alipay and WeChat Pay’s growth.