The People’s Bank of China is hoping its new digital currency will reduce the dominance of Alibaba and Tencent in digital payments, reported the Financial Times.
The experimental digital currency is on trial in a number of Chinese cities and the PBoC intends to use it to simplify digital payments and interbank settlements. Regulators and executives at Ant, Alibaba’s financial affiliate, said PBoC officials have Alipay and WeChat Pay, the dominant digital payments platforms, firmly in their crosshairs.
“It is about the role of a digital currency for domestic retail use,” said a senior executive at the Hong Kong Monetary Authority familiar with the thinking at the PBoC. “They want a more level playing field for the banks. Retail payments are so dominated by Alibaba and Tencent while banks are less active in electronic payments.”
In the first quarter of 2020, Alipay had 55.4% of China’s mobile payment market, according to Beijing-based iResearch, which estimates mobile payments will reach RMB 140 trillion ($19.9 trillion) this year.