AI, 5G and other digital technologies are not only changing our lives but shaping the economy as well.
China's six major commercial banks are stepping up digital wallet efforts to provide new trend for the E-CNY (电子人民币) trials in the country. The purpose, China's bankers said, is not aimed at taking the place of privately-run payment platforms, such as Alipay and WeChat Pay. Instead, this official electronic payment system is being done so that all cash in circulation (流通) can be followed.
Compared with Alipay and WeChat payments, E-CNY features anonymity (匿名) and security.
E-commerce platforms that accept payments via E-CNY will not have access to users' personal information. E-CNY users can open an anonymous digital wallet by registering a mobile phone number, and their information won't be revealed to any third-party institutions. E-CNY users' privacy protection is at the highest level among all the existing payment tools.
Similar to Alipay and WeChat payments, using E-CNY requires an account. After getting the other party's account number, users can enter the amount of digital money to be paid and then enter the password to complete the transaction (交易). However, the processes behind these transactions are different. For electronic payments, the money has to go through a third party, and the receivers will get the money only when they withdraw it from banks. But E-CNY transactions only need a payer and a receiver. Therefore, it guarantees risk-free payments, helps prevent financial crimes and improves the efficiency of transactions.
In simple terms, E-CNY can be considered "money", while electronic payments are like "wallets". The successful launch of the E-CNY may change the existing market structure, which is mainly dominated by Alipay and WeChat Pay now. The banks may return to a leading position in the digital currency system. But China's central bank won't get more money into circulation, since every yuan issued digitally will basically cancel one yuan circulating in physical form.