China’s Apex Bank Plans to Use its Digital Currency Against Alibaba and Tencent

Reports have it that China’s apex bank is planning to leverage its upcoming digital currency towards bringing down the dominance of Alibaba and Tencent in the digital payments space.

This is coming after the People’s bank of China (PBOC) urged a top anti-trust authority to start investigating Alipay and WeChat Pay for leveraging its dominance in the payments space towards suppressing competition.

At the moment, Alipay, the financial subsidiary of Alibaba, and WeChat Pay from Tencent are in control of the majority of digital payments across China while the banks are nowhere near them in the competition. In Q1 2020, about 56 percent of all mobile payments in China were handled by Alipay.

A report by the Financial Times noted that Ant’s (financial group of Alibaba) regulators and executives agreed that China’s apex bank would focus on Alipay and WeChat pay’s market dominance. 

Likewise, the report noted that several officials who understand PBOC’s approaches opine that it will leverage its upcoming digital currency to provide banks equal opportunities in terms of ​​digital payments as before with top technology firms.

On the other hand, some think that DCEP will integrate Alipay and WeChat Pay into the system for faster and smoother digital payments, and not working against them. Another noteworthy point is that Alipay possesses a number of patents related to the DCEP, thereby suggesting that the firm remains entirely in the game.

China’s upcoming digital currency known as the electronic digital currency system(DCEP) is being awaited eagerly, as the PBOC is testing it in numerous cities in the country at the moment.

The PBOC has been developing the DCEP for five to six years. China is close to becoming the first developed nation to release its own national digital currency. Similarly, several apex banks worldwide are exploring the same at the moment with remarkable progress. 

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