Caixin
May 11, 2021 05:55 AM
FINANCE

China’s Digital Yuan Gets Access to Alibaba’s 1 Billion-Person User Base

The digital yuan is accepted as a payment option at a retailer in Shanghai.
The digital yuan is accepted as a payment option at a retailer in Shanghai.

Alibaba Group Holding Ltd.’s online grocery service and food delivery units are included in China’s digital yuan pilot program, giving the sovereign electronic currency system access to the internet giant’s 1 billion users.

Users of Alipay, Alibaba’s mobile and online payment platform, find a “digital yuan” option in their payment options. Now users can make payments using digital yuan in Alibaba’s ele.me food delivery system, Tmall supermarket, and Hema grocery stores.

China is accelerating the rollout of its virtual yuan. So far, several cities, including Beijing, Shenzhen, Chengdu, and Suzhou, have used the digital currency to provide millions of yuan of coupons to local residents since October as part of ongoing pilot programs. People can use the digital currency to shop online and in physical stores and pay for parking and other consumption activities.

MYbank, an online-only bank in which Alibaba’s unit Ant Group has a 30% stake, is now connected with the digital yuan app, along with several state-owned commercial banks including Bank of China, China Construction Bank and Agricultural Bank of China.

Tencent Holdings Ltd.-backed online lender WeBank is also expected to join the digital yuan program. Currently, the WeBank logo appears in the wallet options in the digital yuan app, but the logo is displayed as gray, meaning it’s not connected.

Ant Group, operator of Alipay, said in April that it signed a technical strategic cooperation agreement with the digital currency research institute of the People’s Bank of China (PBOC). The two parties will jointly promote construction of a digital yuan technology platform based on Ant Group’s Oceanbase database and mobile development platform mPaaS.

Mu Changchun, the head of the PBOC’s digital currency research institute, has repeatedly emphasized that the digital yuan is a replacement for cash and will be centrally controlled by the PBOC. The technology behind the currency will enable people to send and receive funds by touching each other’s phones regardless of whether they are connected to the internet, a feature Mu says is a clear advantage over Alipay and WeChat Pay.

The digital yuan platform can encrypt users’ payment information before transferring it to e-commerce platforms, keeping the information out of the hands of the internet giants, according to Mu.

Meanwhile, in response to demands from regulators, Ant Group is drastically revamping its business and will effectively be supervised more like a bank. The fintech giant will transform itself into a financial holding company, with authorities directing the company to open its payments app to competitors, increase oversight of how that business fuels its crucial consumer lending operations, and ramp up data protections.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

Download our app to receive breaking news alerts and read the news on the go.

Follow the Chinese markets in real time with Caixin Global’s new stock database.

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code
NEWSLETTERS
Get our CX Daily, weekly Must-Read and China Green Bulletin newsletters delivered free to your inbox, bringing you China's top headlines.

We ‘ve added you to our subscriber list.

Manage subscription
PODCAST