China’s central bank digital currency (CBDC) mobile app has been upgraded to allow users to fund their accounts via Mastercard (NASDAQ: MA) and Visa (NASDAQ: V) in a move targeted at tourists.
The new update will allow users of the digital yuan app to top-up their balances via Mastercard and Visa payment options as the People’s Bank of China (PBoC) seeks to position the CBDC to compete with other payment platforms in the country. Currently, the digital wallet app is only available to iOS and Google Play Store (NASDAQ: GOOGL) users in mainland China.
China’s latest move has been described as a strategy to attract global users to its CBDC, famously allowing non-residents to create digital yuan accounts using a foreign phone number. Users will have to top-up their digital wallets with at least 100 yuan using international payment processors in a simple four-step process.
The upgrade coincides with the start of the Asian Games, hosted by China, and is expected to attract thousands of foreign spectators. The PBoC seeks to leverage the influx of tourists to mainland China to attract a global user base for its digital yuan.
The banking regulator adopted the same strategy during the Beijing Winter Olympics in 2022, which notched impressive victories for the pilot CBDC project.
Predicting a surge in adoption, the central bank has confirmed that it will be extending the digital yuan usage to a wide range of retail payment scenarios. Previously, the digital yuan debuted in transportation, retail, and e-commerce transactions, with the central bank keen on pushing the adoption limits.
“First thing to be upgraded is the payment tool used in retail scenarios, that is, digital renminbi is used as the payment tool in all retail scenarios,” said Changchun Mu, head of digital currency research at the PBOC, at the time.
“Some people now believe that the retail scene means that the digital renminbi can only be used for small payments and cannot be used for large payments,” Mu added.
Previous attempts by the PBoC to attract foreign users have yet to be smooth sailing, with U.S. officials pushing to bar Google and Apple (NASDAQ: AAPL) from hosting applications that accept the digital yuan. U.S. authorities argue that China’s CBDC could be a tool of state surveillance on U.S. citizens, a claim vehemently denied by the PBoC.
A two-way thing
While China is keen on attracting global users, the central bank is making a valiant effort to ensure that its citizens visiting other countries can pay for goods and services using the digital yuan abroad.
In July, the PBoC announced a plan for Chinese tourists visiting Hong Kong to use the CBDC to make payments in over 100 stores. To stimulate greater merchant adoption, the Bank of China (Hong Kong) launched a digital yuan shopping festival, which it says could be vital in boosting adoption rates.
A previous hard launch by the PBoC to introduce the digital yuan in Hong Kong Limited faltered after less than 1,000 residents interacted with the offering after the first five days.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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