SUZHOU, China – In one of the latest experiments being carried out by the People ‘s Bank of China into their progressive project to digitize the Yuan, Zhou Jie considers himself one of the winners.
The entrepreneur, who runs a bubble tea shop called Bianjing Teahouse in a shopping center in the eastern city of Suzhou, was one of the people selected to receive 200 yuan in a trial release of the yuan digital.
“I spent it all on food,” said Zhou, who came out from behind his drink counter to display the digital money app on his mobile phone, with zero balance. “I was happy to be one of the lucky ones.”
A handful of customers showed up to order drinks but none used digital yuan. “We have had a number of customers who have used it during [the] Lunar New Year holidays, “Zhou said.
It was released in December as part of tests that began in October when China ‘s central bank was cautiously pushing for a radical change in the way money circulates.
The tests also aim to encourage spending and diversify the payment system. The Suzhou lawsuit was open to permanent residents with a social security number and a bank account, who received the booklet through a lottery on mobile apps.
Chengdu, in western China, began its own trial on March 3, with 200,000 e-wallets worth 40 million Yuan ($ 6 million) randomly distributed to residents in two types of 178 yuan and 238 Yuan for spending over 12,000 named retail stores.
The leaflets were funded by the Chengdu government and online retailer JD.com to encourage spending. The trial is set to end this week.
Smaller trials also began in Shanghai this month for a limited time, with select banks rolling out the digital Yuan to employees and clients, according to retailers at two centers in a tourist area . The cash limit can be used to purchase beverages and snacks at designated vending machines in nearby underground stations.
China is already accustomed to electronic money through mobile payment apps, such as Alipay, owned by Alibaba-subsiary Ant Group, or WeChat Pay, owned by Tencent.
In Suzhou, Zhou Jie said the PBOC test was similar to using other apps. “Perhaps the only drawback is that the digital Yuan has not been transferred to another person,” she said.
Digital money is tied to a bank account just like one of the central bank’s digital payment initiatives. Other products include physical wallets in the form of plastic cards, keys and accessible devices with near-field communication capability for offline transactions.
The PBOC provides back-end infrastructure and management, while commercial banks rely on circulation, market development and business processing.
The campaigns reflect China’s desire to be at the forefront of the central bank’s digital currency distribution. China’s central bank has not released details of the issue but officials have said the digital currency is aimed at replacing the cash supply, which will lead to lower cost and which prevents illegal money transactions. It also diversifies China’s mobile payment market, controlled by Alipay and WeChat Pay.
And China is not hiding its desire to internationalize the Yuan. Last month, the PBOC teamed up with peers in Thailand, the United Arab Emirates and Hong Kong to investigate the feasibility of using a central bank’s digital currency for cross-border payments.
“China and other East Asian countries can gradually push forward cross-border transactions using digital currency,” Zhou Xiaochuan wrote last month in Caixin, a daily-based finance company. am Beijing. Zhou was a central bank regulator when Beijing’s digital currency electronic payment project began in 2014.
Ni Mengjiao, a buyer in Suzhou, displays an advertising banner informing customers about the digital currency test. (Photo by CK Tan)
The routine tests also involve thousands of online and offline merchants employed by the six state-owned commercial banks, including the Bank of China and the Postal Savings Bank of China.
JD Technology, another subsidiary of JD.com, has been supporting the extended test runs, helping buyers upgrade their payment systems.
In Suzhou, not all consumers were as eager as Zhou.
“We only have a handful of customers using digital money to pay,” said Ni Mengjiao, owner of a chain restaurant called Hetaiji Dumplings. “Apparently, not many of them were aware, because they asked me about the digital yuan on these promotional materials,” Ni explained, pointing to stickers and a pop-up banner at the front of her store.
In the second trial last month, only 1% of Suzhou’s 11 million people were selected for the handshake. The majority of consumers were young people, judging from the customers at the Ni revolution in a promotion center.
As a participating merchant, she did not have to pay a processing fee for each transaction, unlike Alipay and WeChat Pay. “It’s great to offer an additional payment channel, especially when digital money eventually goes to mainstream,” Ni said.
But she said one benefit was that transactions could not be integrated into her service’s payment system. “I find it very difficult to report matters separately to headquarters,” she said.
“I was not aware [the trial] until I saw shops displaying the digital money sign, ”said a Suzhou resident.
Public awareness may still be at an early stage, but trials have progressed. China Pacific Insurance is the latest to join the digital money test bandwagon, releasing its first digital currency insurance policy last week to state-owned Lingang Group to project construction written in Shanghai.
“Bankers said we may be able to issue payment checks in digital currency in the future,” Ni dumpling entrepreneur said. “When this happens, we may see more people using it.”