Chinese businesses are discovering new uses for the digital yuan — with merchants being given services that enable them to sign up to receive payments in central bank digital currency (CBDC) via third-party operators.
According to a report by China National Radio, domestic banking behemoth UnionPay would offer a self-service registration website for retailers interested in using the digital CNY.
UnionPay has signed a strategic cooperation agreement with the Digital Currency Research Institute, the central People’s Bank of China’s CBDC branch, becoming “one of the first third-party payment service organizations” in the country (PBoC).
UnionPay would enable businesses to take digital CNY payments in-store and via their own applications as part of the partnership. Additionally, it will enable them to offer H5 payment choices. In China, H5 refers to promotional mobile web pages shared via the WeChat ecosystem.
The transaction also involves the China Construction Bank (CCB), one of the country’s four largest banks.
According to the report, the measure was accelerated in reaction to China’s escalating coronavirus outbreak, with several cities – including Shanghai – already enforcing lockdowns.
The full activation process “should take no more than five minutes.” Initially, the platform will support only CCB-operated digital CNY wallets, but other financial institutions’ wallets will be added on a case-by-case basis.
Meanwhile, Chinese enterprises are beginning to accept digital CNY for business-to-business (B2B) payments. While the pilot has thus far focused mostly on consumer-to-business payments, micropayments, transportation charge payments, and the transfer of monies between individuals and government entities, inter-business transactions represent a relatively new frontier for China’s CBDC.
Suzhou High-Speed Rail New Town State-owned Assets Holding Group, a state-owned industrial products store based in Suzhou, executed the pioneering first transaction on March 25, according to WXRB.
Although the report did not specify who received the cash or what it was for, the sum was about USD 17,263.
According to the group’s finance department manager, the transaction was “very secure, convenient, and quick,” and supplied the payee with a “real-time account receipt,” which she noted “reduced handling expenses.”
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.