DCEP is “in” the game, alipay and WeChat facing challenges

The inner test of digital currency by the Central Bank of China(“DCEP”) has attracted great attention from all circles.According to screenshots previously exposed, the test environment of DCEP is dedicated digital wallet APP, not WeChat and alipay.

In modern life, alipay and WeChat, two major mobile payments, have become important payment tools for mass online and offline consumption, life payment and mobile phone recharge due to their convenient payment methods.One of the biggest concerns for the outside world is that there is no service fee in the transaction flow of DCEP. Currently, alipay and WeChat platforms charge certain service fees for users to withdraw their balance and repay their credit cards.

However, the impact of DCEP on them will not be big in the short term. At present, it will be promoted by Shenzhen, Chengdu, Suzhou, Xiongan New Area and other relevant departments of the future Winter Olympic Games. There is no exact information on when to expand the scope of DCEP.

The digital currency sector has been a hit with investors.According to Wind data, the digital currency index surged 2.81% on August 14, another 3.35% on August 17, and continued to rise 1.07% on August 18. On August 24, the digital currency index closed at 1262.932 points, up 3%, with 7.097 billion CNY traded.

The popularity of the capital market in the digital currency sector has to do with the outside world’s understanding of its future relationship with mobile payments.Alipay and WeChat as two platforms with obvious differences, which of them suffer the bigger challenge?

Challenges and Opportunities of the duopoly

In contrast, mobile payment in the Chinese market development momentum is strong.A data report released by the People’s Bank of China recently showed that in the second quarter of 2020, the total amount of mobile payments in the Chinese market reached 30.141 billion, totaling 106.17 trillion CNY, an increase of 33.61% year on year.

The seemingly huge Chinese mobile payment market is actually carved up by WeChat and alipay.WeChat payment and alipay account for 95% of the market share in mobile payment, among which WeChat payment accounts for about 40% in terms of transaction volume, and alipay accounts for about 50%.Alipay, WeChat pay to form a duopoly pattern.So how will digital money affect the status of the two giants?

In terms of security.Alipay or WeChat payments are settled in commercial bank deposit currency, while DCEP is settled in central bank currency.Generally speaking, if a commercial bank goes bust, the money in WeChat’s wallet can only be liquidated unless there is deposit insurance, but DCEP, which is protected by the central bank’s lender of last resort, is different.

In terms of privacy.The third-party payment is bundled with the traditional bank account, so the real personal information is clear at a glance.It can be said that the third-party payment cannot meet the public’s demand for anonymity, and is itself regulated.DCEP, on the other hand, does not need to bind any bank account. It has both the property characteristics of cash and the function of anonymity.Under the legal conditions, DCEP can protect privacy and protect consumption that no one wants to know about.

In terms of convenience, the network is a necessary condition to support WeChat payment and alipay.If the mobile phone signal is bad or there is no network, WeChat and alipay cannot be used normally, which is also a major drawback of alipay and WeChat payment at present.The central bank’s digital currency has the function of offline payment, which means it is no longer limited to the Internet, and can be used to transfer money, consume goods and make payments with the touch of two phones.The barrier between WeChat payment and alipay is also an important aspect that leads to the trouble of third-party payment. DCEP has “unlimited compensation”, which enables DCEP to break through the payment barrier between different platforms.

In addition to these advantages, digital currency has an even bigger advantage: no fees.We know that alipay, WeChat and other payment platforms require handling fees for cash withdrawals.When using alipay or WeChat to pay off a credit card, a portion of the fee is collected because the two companies’ channels allow money to flow between financial institutions.But there’s no such thing as a fee for paying a credit card in digital currency.

These advantages of digital currency just hit the weakness of third-party payment tools.Overlapped with the functions of third-party payment tools, it is bound to take away some of the traffic of the two giants.

About ZB Group

ZB Group was founded in 2012 with the goal of providing leadership to the blockchain development space and today manages a network that includes digital assets exchanges, wallets, capital ventures, research institutes, and media. The Group’s flagship platform is ZB.com, the industry leading digital asset exchange. The platform launched in early 2013 and boasts one of the world’s largest trading communities.

ZB Group also includes ZBG the innovative crypto trading platform, and BW.com, the world’s first mining-pool based exchange. Other holdings include wallet leader BitBank, as well as exchange brands ZBM, ZBX and Korea’s Bithi.

Industry intelligence and standards are headed by the recently launched ZB Nexus who embody the core values of ZB Group and open-source their reports and analysis for the public.

Learn more about ZB Exchange by visiting www.zb.com.

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