Middle Kingdom – Merchant’s not allowed to decline E-Yuan Payments during the ongoing pilot program

As cited in the operational guidance document handed out to merchants during the digital Yuan pilot program, there will be no digital currency fee while settling for payments. There will be a settlement fee needed for using payment apps such as Alipay and WeChat Pay. The operational guidance document additionally explained that a merchant can reject payment in Alipay or WeChat Pay but cannot refuse payment in e-Yuan.

China’s Ongoing E-Yuan Test Trials

In eastern Jiangsu province, Chinese Suzhou city is one of the four towns designated to test the e-Yuan, formally called the Digital Currency Electronics Payment (DCEP). As an example, two weeks ago, Local officials provided 100,000 electronic red packets away through a lottery on the town’s public services app. Each packet included around 200 yuan (US$30) worth of e-yuan for consumers to spend at stores.

Before the Suzhou, China carried a similar digital currency trial in Shenzhen in October. Shenzhen gave away 10 million Yuan (US$1.53 million) worth of the digital currency to 50,000 local citizens in its Luohu district.

China’s central bank is also running their testing phase of the digital currency in the cities including Chengdu and Xiongan, and locations for the 2022 Winter Olympics.

Still, specific restrictions are required in the trial, comprising the inability to withdraw cash from the e-Yuan account. Moreover, Digital Yuan cannot transfer balances in the digital app to a personal bank account.

Promotion of Digital Yuan Trial Inspired By Alibaba

There are doubts regarding the digital Yuan’s future regarding whether Chinese consumers and merchants can quickly accept the digital currency between existing user-friendly payment apps. Chain’s promotion of the digital currency by convincing merchants following the distribution of red packets to customers can be entirely attributed to the marketing tactics used by Alibaba and Tencent.

For example, Alibaba hired staff to persuade and convince small merchants across the country to use Alipay. This resulted in WeChat Pay being the most widely used app among Chinese consumers after its distribution campaign of red packets during the Lunar New Year holiday in 2014.