China Implements Digital Yuan Payment for Workers, But Adoption Remains Low
China pays some workers in digital yuan, but adoption remains low. Concerns over privacy and limited acceptance hinder usage. Established payment apps like Alipay and WeChat Pay pose competition.
However, despite the government's efforts, few employees are choosing to use the new form of payment. Sammy Lin, an account manager at a state-owned bank in Suzhou, receives her monthly salary in the form of digital currency through the "e-CNY" app. While the money automatically transfers to her bank account, she prefers to convert it into regular cash due to the lack of interest and limited acceptance of the digital yuan.
The pilot program to popularise the digital yuan began with government employees and state-owned company workers. Changshu, a city in Suzhou, was the first to pay all public sector workers in digital yuan, followed by Lin's employer. However, despite being part of the pioneer group, Lin and many others are not actively using the virtual currency. Their reasons range from concerns over privacy to functional limitations.
Privacy is a major concern for many individuals, as all transactions made with the digital yuan are traceable in a digital ledger. While some see this as a way to combat corruption, others worry about the lack of anonymity. Ye Dongyan, a researcher at the Cheung Kong Graduate School of Business, highlights the need to balance privacy and security in promoting the digital yuan.
China has rapidly become a cashless society with the dominance of privately owned online payment tools like Alipay and WeChat Pay. These platforms, although not under direct government control, offer convenience and a wide range of functions. Former People's Bank of China governor Yi Gang assures that the digital yuan can protect privacy through "controllable anonymity," allowing smaller transactions to remain untraceable while larger ones are traceable.
While some workers, like Albert Wang, who receives a small portion of his salary in digital yuan, are content with the arrangement, others find it inconvenient. Wang's wife, who is also a civil servant, withdraws the digital yuan upon receipt as she cannot deposit it or use it for financial products. The limited acceptance of the digital yuan in shops and its lack of competitiveness with established payment apps like Alipay and WeChat Pay are major obstacles to its wider adoption.
China began testing the digital yuan in select cities in 2019 and has actively promoted its use since then. The Industrial and Commercial Bank of China reported that over 15 million e-CNY wallets were opened by individuals last year, along with 1.3 million by businesses. Additionally, more than 2.7 million shops started accepting the digital currency. However, a national launch timeline has not yet been announced.
China pays some workers in digital yuan, but adoption remains low
Concerns over privacy and limited acceptance hinder usage
Established payment apps like Alipay and WeChat Pay pose competition
Source: SCMP