China’s digital currency tsar says e-pay platforms could bypass banks to give tourists access to cashless payment services

Mu Changchun, the Chinese central bank’s foremost authority on digital currencies said the People’s Bank of China is ready to open its digital currency to visitors and rural residents without needing them to open bank accounts

The move comes as Alipay and WeChat Pay account for 96 per cent of the country’s mobile payment, as the duo become “systemic significant” infrastructure, he said

Reading Time:3 minutes

Cashless payment platforms through smartphone-enabled QR codes are ubiquitous in China, expanding to a US$12.8 trillion market by the end of October in 2017. Ant Financial’s Alipay and Tencent’s WeChat Pay are the two dominant service providers. Here a seafood hawker in Beijing announces he accepts both payment methods. Photo: EPA

Published: 2:18pm, 6 Nov 2019Updated: 10:30am, 7 Nov 2019

China’s central bank, working on a plan to launch a digital version of the renminbi, said the virtual currency can be “decoupled” from the banking system to give visiting tourists a taste of the nation’s burgeoning cashless society.

The original construct of the proposed digital currency electronic payment (DCEP) system, which relies on licensed commercial banks to convert cash and coins in circulation into digital versions of the yuan, can be separated from the system for short-term visitors, said the director general at the Institute of Digital Currency at the People’s Bank of China. That would allow them to use the digital currency without first having to open a bank account with a Chinese bank, he said.

“The DCEP is loosely coupled with a traditional bank account,” said the central bank’s Mu Changchun, during the 2019 Hong Kong fintech Week conference. “Actually it could be decoupled from the traditional bank accounts. Thus, those who don’t have bank accounts in China can still open a digital wallet and enjoy mobile payment services in China.”

Mu’s comment offers a peek and the theoretical framework into the Chinese central bank’s plan to spearhead the development of fintech, leveraging on the estimated US$12.8 trillion in electronic payments recorded by the world’s second-largest economy in the first 10 months of 2017. Ant Financial Services, an associate of this newspaper’s owner Alibaba Group Holding and the dominant operator of China’s two e-payment platforms, yesterday said it would offer foreign tourists up to 90 days’ usage of its smartphone application without requiring a local bank account.

Mu Changchun (centre) of the People’s Bank of China during a panel discussion at Fintech Week conference on how the central bank’s digital currency could shape the future of cross-border payments. The panel was chaired by the Hong Kong Monetary Authority’s senior executive director Edmond Lau. Photo: Handout

Ant’s Alipay ‘Tour Pass’ still requires a prepaid card from the Bank of Shanghai as the agent for transactions of between 100 yuan and up to 2,000 yuan each. Mu’s comments implied that in future, accounts at commercial banks can be completely cut out.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x