Digital RMB App is here: what to do with Alipay and WeChat Pay

In the research and development of central bank digital currency, China is at the forefront of the world.

Recently, the digital RMB (pilot version) App was officially launched in major application markets. The “Developer” column of the app is displayed as the Digital Currency Research Institute of the People’s Bank of China. It is the official service platform for China’s legal digital currency – digital RMB to conduct pilot projects for individual users. It provides the opening and management of digital RMB personal wallets, digital RMB Exchange and circulation services. At present, the digital renminbi is still in the routine testing stage in the research and development process, and whitelisted users expanded by operating agencies in pilot areas and pilot scenarios can register for the digital renminbi app.

One Finance found that the digital RMB App has been connected to a variety of online payment scenarios recently, and users can use it by adding a “sub-wallet”. At present, there are 49 merchants online on the sub-wallet page, including shopping, travel, life, tourism and other categories, including, Meituan,, Tmall Supermarket, Didi Chuxing, Bilibili, Kuaishou, iQi Art, Tencent Video, Baidu and other Internet merchants, as well as SF Express, Online State Grid (for electricity bill payment), Sinopec, China Telecom Wing Payment and other common payment scenarios in daily life. It can be said to be eating, drinking and playing, and the digital RMB App can be used.

It is worth noting that the digital renminbi is currently only piloted in Shenzhen, Suzhou, Xiong’an, Chengdu, Shanghai, Hainan, Changsha, Xi’an, Qingdao, Dalian and the Winter Olympics (Beijing, Zhangjiakou), and registration in other regions is temporarily unavailable.

According to the actual measurement of Zero One Finance, new users can use the digital RMB (pilot version) App to make online and offline payments only after registering with their mobile phone numbers. At the same time, you can also choose to open nine banks including Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, Postal Savings Bank of China, China Merchants Bank, MYbank (Alipay), and WeBank (WeChat Pay). digital wallet.

Next, I will share an article “Digital RMB: Come with a mission! “ , let’s learn about the digital renminbi together.

When was the last time you used cash? If I’m not mistaken, the last time you used cash was… the last time, right? Well, today, with the full popularization of electronic payment and mobile payment, the use of cash is becoming less and less, and more and more young people and even middle-aged and elderly people basically no longer use cash.

But do we really need cash? No! What we don’t need is inconvenient cash. And we still need electronic cash that is easy to carry and not easy to lose! And, we don’t have too many, that’s the more the better.

Hello everyone, I’m Lingyijun, welcome to my channel, learn about digital technology, and understand the digital economy. Today, we will learn about digital renminbi and discuss a very interesting question, will digital renminbi replace third-party payment?

The term digital renminbi is not familiar to all members of the One Think Tank who are at the forefront of science and technology. Friends living in some pilot cities may have already experienced it, and it is even more impossible for those who love online shopping to have not heard of it. However, after all, in the past Double Eleven, more than 100,000 people used digital renminbi for consumption in a certain east. Can you talk about the face and lining of the digital RMB in detail, are you a little confused? It doesn’t matter, Mr. Zero One will give you a stroke~ 

According to the official definition given in the “White Paper on the Development of China’s Digital RMB”: Digital RMB is a digital form of legal tender issued by the People’s Bank of China. Equivalent to physical RMB, it has the characteristics of value and legal compensation.

To understand the digital renminbi, we also need to distinguish several concepts: digital renminbi, cash (that is, physical renminbi), bank deposits, and third-party payment platform balances. In simple terms, both digital renminbi and cash are liabilities of the central bank to holders, bank deposits are liabilities of banks to depositors, and third-party payment platform balances are liabilities of third-party payment institutions to account holders. In other words, Both bank deposits and payment balances are corporate liabilities. Although there are various supervision and security systems for banks and third-party payment, for example, banks have deposit reserve system and deposit insurance, and the reserves of third-party payment institutions have been fully deposited with the central bank. But an enterprise is an enterprise, and the credit of an enterprise is very different from that of a country.

In theory, digital renminbi and cash are peers, and there is naked hatred. The two have a strong competitive and substitute relationship. If you are used to the digital renminbi, you may not want to use cash anymore. But from a macro perspective, digital RMB will coexist with physical RMB for a long time to come. Yi Gang, governor of the central bank, once stated: China has a vast territory, a large population, and regional development differences. These factors and the payment habits of residents determine that cash will continue to exist for a long time in the foreseeable future. As long as there is a demand for cash, the PBOC will not stop the supply of cash or replace it with an executive order. The use and promotion of central bank digital currency should follow the principle of marketization. In other words, the central bank will issue as much as the people need to exchange.

If digital renminbi and cash are close relatives, then digital renminbi and third-party payment are essentially two species. However, from the user’s point of view, especially the user experience, digital RMB is basically similar to third-party payment platforms, and both are a digital payment method.

The question is, I already have Alipay and WeChat, why should I use digital renminbi? Of course, the digital renminbi has very unique advantages in certain aspects and certain application scenarios!

The first is information security. Yi Gang, the governor of the central bank, said at an event recently that the digital renminbi adopts the principle of “small amount of anonymity and large amount of legal traceability” in terms of anonymity, and follows the “minimum and necessary” principle when collecting personal information. less than existing electronic payment tools. At the same time, strictly control the storage and use of personal information. The People’s Bank of China shall not provide relevant information to any third party or government agency unless clearly required by law. In addition, my country’s recently promulgated “Data Security Law” and “Personal Information Protection Law” have also strengthened data security and privacy protection from the legislative level.

Then there’s convenience. Bank online payment and non-bank payment methods such as Alipay and WeChat payment are already very convenient, but in the state of industry monopoly and market segmentation, we will inevitably encounter some “choose one” problems. For example, some merchants mainly promote Alipay when Alipay red envelopes are strong, and only accept UnionPay when UnionPay is subsidized, or some online platforms only provide niche payment tools. Therefore, the digital renminbi comes with the mission of changing the fragmented state of the payment market, but this does not mean that the digital renminbi intends to replace these market-oriented payment methods, but rather forces them to regulate compliance operations, and the digital renminbi will give us Offers a basic undercover option. This is similar to our express market. Most of the time, we can choose SF Express,, three links and one delivery, or even Jitu according to our specific needs. But if these companies cannot provide services for various reasons, at least we can think of China Post.

The convenience of digital renminbi is also reflected in the fact that there is no network payment. Even if the payment device and the collection device are disconnected from the Internet, that is, in the case of dual offline, the payment can still be completed through contact.

Scanning the QR code to pay the parking fee in the underground parking lot, but not connecting to the Internet, scanning the QR code in the subway station, but still unable to open the QR code, is a very common embarrassing experience. At this time, dual offline payment can play a role.

During this year’s flood in Henan, some areas were disconnected from the Internet for a long time, resulting in limited digital payment methods. Some people have imagined whether the “dual offline” of the digital renminbi can play a role in such a situation. But the reality is that it works, but it is extremely limited.

Because, there is a limit to the number of dual offline payments, which is related to the implementation principle of dual offline payments.

At present, the wallet forms of digital RMB can be divided into App wallets and hardware wallets, and hardware wallets with built-in security chips are the key to realize “dual offline” payment. The carriers of hardware wallets mainly include mobile phones with built-in security chips, wearable smart hardware, Separate NFC card and SIM card.

On the one hand, the storage capacity of these hardware wallets is small, and the currency strings and information need to be stored locally under dual offline transactions, which leads to a limited number of currency strings that can be stored, which indirectly affects the upper limit of the number of transactions;

On the other hand, due to the power consumption requirements of mobile devices, the chip computing power of these hardware wallets is limited, and the number of offline transactions is too large, which will cause the transaction time to be too long, thus affecting the transaction time and efficiency.

In addition, the current digital renminbi cannot fundamentally solve the “double-spending” problem technically. What is double spending? Simply put, it is to reuse a sum of money by taking advantage of the poor information brought about by network delays. Therefore, for security reasons, it can only be used in small retail scenarios to control the risks brought by the “double-spending problem” to a certain extent. Of course, this is not enough. We also need to rely on the establishment of a credit system and strict supervision measures to prevent risks. Even if there are still fish that slip through the net, we still have a legal system to rely on, and we can pursue accountability after the fact.

In addition to safety and convenience, digital renminbi has a huge advantage over third-party payment, that is, there is no handling fee for payment, and there is no handling fee for both parties. This is determined by its cash nature. After all, the receipt and payment of physical cash does not require any With the participation of intermediaries, the handling fee is out of the question. For third-party payment or bank card swiping, the merchant needs to pay the handling fee to the acquirer and the card issuer. Whether or not a handling fee is required will definitely affect the choice of merchants, and of course also indirectly affect consumers.

So the question is, since digital renminbi has so many advantages over third-party payment, will it replace it?

Officially, no, at least not subjectively. Yi Gang, governor of the central bank, said that for China, the research and development of digital renminbi is mainly to meet the needs of domestic retail payment, improve the development level of inclusive finance, and improve the operation efficiency of the currency and payment system. In the process of promoting digital currency, the central bank pays more attention to investor protection, transaction compliance, anti-money laundering, financial supervision and other aspects, rather than market share.

Not only will it not be replaced, but there will be more cooperation. From the top-level design point of view, the digital renminbi adopts a two-layer operation system, the first layer is the central bank, and the second layer is commercial banks, telecom operators and third-party payment network platform companies. In the short term, the digital renminbi will need to rely on banks and third-party payment institutions to expand its usage scenarios.

Therefore, if you regard digital renminbi and third-party payment platforms as competitors, you will see a bizarre scenario that goes against business logic, that is, banks and third-party payment institutions are actively striving for the pilot of digital renminbi Qualified to vigorously promote the digital renminbi.

How to understand this situation? To explain it in one sentence, it is “if you can’t beat it, join in”! The popularization of digital renminbi is the general trend. What third-party payment can do is to find a new position on this basis. In the words of Mu Changchun, director of the Central Bank’s Digital Currency Research Institute, it is: copper money travels thousands of homes without legs, and the circulation process of currency needs to be realized by the whole society. Of course, non-bank payment institutions will still find their own roles in this process to make corresponding contributions to the exchange and circulation of digital renminbi.

ZeroOne Blockchain, a subsidiary of ZeroOne Finance, once published an article entitled “Challenges and Opportunities for Third-Party Payments in the Digital RMB Era”, analyzing the situation faced by third-party payments. Among them, there are three judgments: first, digital renminbi will crowd out the flow of third-party payment and lead to lower intermediary service fees; second, payment derivatives based on digital renminbi may become the key to seizing the payment highland; third, digital renminbi-related The unclear path to operational data management becomes an important variable.

Translated into adult words, it belongs to the boss’s territory. The younger brothers should not touch it. If the boss does not want it, the younger brothers will divide it again. As for how the younger brothers are divided, the boss also needs to maintain fairness and justice.

According to the “White Paper on China’s Digital RMB R&D Progress”, as of the first half of 2021, there have been more than 1.32 million digital RMB pilot scenarios, covering life payment, catering services, transportation, shopping consumption, government services and other fields. Opened more than 20.87 million personal wallets and more than 3.51 million public wallets, with a total of more than 70.75 million transactions and an amount of about 34.5 billion yuan.

The reason for these achievements is not only the charm of the digital renminbi itself, but also the hard work of commercial banks and third-party payment.

Therefore, let’s sum up that digital RMB will not replace third-party payment subjectively, but it will definitely squeeze the market space of third-party payment. As for what kind of market pattern will be formed in the end, because digital RMB is still in the pilot stage, there are still more in the future. Certain uncertainties await further observation. But it can be seen that third-party payment institutions are ready to actively embrace changes.

At the end of the video, I briefly respond to the two questions that everyone is concerned about: First, the digital renminbi will not bring currency over-issuance and inflation. On the contrary, the digital renminbi will reduce the willingness of residents to deposit cash in the bank to a certain extent, resulting in a decrease in the bank’s money multiplier, which will lead to a certain monetary tightening effect. But because of the digital features of digital currency, it is easier for the central bank to hedge through precise monetary policy.

Second, there is no direct causal relationship between the digital renminbi and the internationalization of the renminbi. Although the issuance of the digital renminbi will create more favorable conditions for cross-border payments, it cannot directly increase the world’s demand for the renminbi, and will not lead to the internationalization of the renminbi in the short term. Substantial push and influence. However, in the long run, with the improvement of China’s national strength, the world’s demand for RMB will also continue to increase. How to convert this part of demand into the actual market share of RMB is a key step in the internationalization of RMB, and the issuance of digital RMB will be in the long run. It can provide some support for this crucial step.

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