BEIJING, China: For 36 years, Visa Card has paid hundreds of millions of dollars to be an Olympic sponsor, but at the Winter Olympics in Beijing, Visa is facing a local competitor, the Chinese government.
Along with the “Pay with Visa” signs are smaller logos for China’s government-backed electronic currency, the e-CNY or digital yuan.
The country’s central bank, the People’s Bank of China, has been conducting trials of the digital currency in pilot areas for two years, but the Winter Olympics are the first time most foreigners will have the opportunity to purchase the yuan.
However, due to COVID-19 concerns, China has banned international spectators attending the games, and only a few foreigners, journalists, Olympic staff and athletes are being exposed to the digital yuan promotions.
In addition, Alipay or WeChat Pay, China’s largest payment providers owned by tech giants Alibaba and Tencent, allow users to easily link bank or credit cards to add funds, though only people with Bank of China bank accounts can use the e-CNY.
Journalists successfully obtained a limited amount of e-CNY by swapping paper notes at a Bank of China outlet within the Olympic village, but only after providing a passport to open a “hardware wallet,” essentially a cash card that could be used at contactless terminals.
Chinese state media has extensively covered electronic currency and its potential for expansion.
“Launching the digital yuan at a big party like the Winter Olympics can showcase China’s latest fintech achievement to the world,” noted Bank of China official Li Xin, as quoted by CCTV.
Chinese officials aims to use the e-CNY to internationalize the country’s currency, which is used for only 2 percent of global transactions.
Viktar Fedaseyeu, finance professor at the Shanghai-based China Europe International Business School, said the success of Alipay and WeChat Pay is one of the reasons Beijing is promoting the e-CNY, despite other countries being years behind.
China is nearly cash-free, especially in major cities, but this has been driven by private companies, not the state.
“A very large share of payments in China go through these two huge platforms, and a lot of these payments actually bypass bank deposits,” Fedaseyeu added, as quoted by The Globe And Mail.
“In the U.S. and Europe, everything goes through banks, ultimately, so the central bank has a lot more power over money in circulation. In China, the central bank has less power because of electronic payments,” he added.
Fedaseyeu predicts the e-CNY could gradually surpass both Alipay and WeChat Pay, and the Chinese government is already encouraging Alibaba and Tencent to support it.