Article translated by David McAlpine from Chinese news site https://www.ntdtv.com/gb/2022/11/15/a103575383.htm
[NTD News, Beijing time, November 15, 2022] There is news coming out of the internet in China that the relevant departments of the Central Bank of China will cancel the use of mobile payment services such as WeChat Pay and Alipay. Official state run media is attacking the security loopholes of the Wechat and Alipay wallets whilst fawning over the Central Bank issued digital currency (the e-Yuan), causing the outside world to worry about private digital payment systems falling into the hands of the state.
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Recently, an article titled “Will WeChat and Alipay be cancelled? The Central Bank Has Announced the News. I Didn’t Expect it So Soon” appeared on Chinese internet, which aroused the attention of public opinion. In the article it states that recently Wechat and Alipay have 90% of the Chinese mobile phone payment market and that in 2021, the market was 48 trillion Yuan ($17.7 trillion USD) but these two payment services may be replaced by its number one rival: ‘the digital RMB’ (e-CNY) in the future.
The article then introduces the e-Yuan as a legal digital version of the normal RMB but under control of the Central Bank of China. It has the same function as traditional banknotes but the only difference is that it is a virtual currency that exists on the mobile phone and is backed by the Central Bank. There is no need to go through cumbersome steps such as adding a bank card, and it is more convenient to use.
This article quickly attracted widespread attention from Chinese netizens while the outside world began to speculate that the Central Bank and its related departments will cancel the use of WeChat, Alipay and other mobile payment software.
In fact, similar articles have frequently popped up on Chinese internet recently, and the common point is that they criticize the QR code payment of WeChat and Alipay for low security, saying they are prone to security loopholes and have a hard time protecting user privacy while being cumbersome to use etc. At the same time, these articles vigorously promote the e-Yuan issued by the central bank as “safe and convenient,” can be used anonymously, can be used offline, do not require a bank card and can be used even without a network signal. They declared that in the future, we will “say goodbye to QR code payments, and WeChat and Alipay will disappear.”
Therefore, there is public opinion that Chinese authorities may have started to ‘clear the way’ for widespread use of the e-Yuan so that it will have a monopoly on the digital payments market. WeChat Pay and Alipay are bound to be suppressed or even replaced by the authorities.
It is worth mentioning that the Chinese government has taken measures in recent years to tighten restrictions on electronic payments such as WeChat Pay and Alipay.
For example: early last November, the official website of the Central Bank released the document, “Notice of the People’s Bank of China on Strengthening the Management of Payment Acceptance Terminals and Related Businesses (Bank Statement [2021] №259)”. It announces three requirements. First that the payment barcodes be regulated, the payment terminals be regulated and that certain merchants be regulated. There are a number of specific requirements for payments to clear.
This March, Chinas Central Bank announced new regulations for QR codes payments, restricting the QR code of individuals from being able to receive payments outside of “business activities.” There will also be restrictions on non face-to-face transaction and tightening the controls of online payments.
Chinese finance scholar, Si Ling, spoke at an interview with Radio Free Asia saying that the Chinese Communist Party authorities considered the high risks of online payment, yet allowed private enterprises to develop their own mobile payment software with loose rules. Now they see “this cake is getting bigger and bigger.”
In the face of economic recession under the “Zero Covid” policy we have to focus on ‘internal circulation.’ In this context, the “new relationship between the public and the private” will expand, and it is not ruled out that mobile payment apps such as WeChat and Alipay will also be banned by way of “nationalization”.
He points out, The Chinese Communist Party government now desperately needs technology and resources to implement its so-called “macro-control” very possibly using the e-Yuan to replace Wechat Pay and Alipay to become the leader of the mobile payments market.
They may continue to use administrative means, legal means and or seemingly market means such as “shareholding” and “investing” to acquire them. Private enterprises “cannot say no.”
News of Wechat Pay and Alipay wallets being replaced with the e-Yuan on social media sparked a public backlash. Chinese netizens left messages criticizing, “So greedy! They are eating it like a cake.”; “Private enterprises cannot compete with the state.” “It is difficult for state-owned enterprises to have innovative genes. Once (Alipay, etc.) becomes a state-owned enterprise, mobile payments will be finished.”
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