All businesses that aim to grow their market share by accepting digital Yuan must read the various information materials about the advantages of Digital Yuan in the new financial system. They should also educate themselves about how this payment system works, what can be done with it, what its benefits are and so on.
Launched at the end of 2021, China’s digital currency is gradually rolling out to several cities in the country’s west and southwest regions. The People’s Bank of China (PBOC) aims to have all pilot CBDC projects operational by 2022. Moreover, you will get live customer support.
This move was not unexpected for the world’s second-largest economy. China has actively participated in several developments to make its financial system more digitized, transparent and efficient. Introducing a digital currency system will significantly streamline and reduce costs reducing friction, solving information asymmetry, reducing fraud and increasing overall efficiency. Apart from this significant economic benefit, it will also set up a solid foundation for further innovation and development in the financial sector with broader applications.
China’s digital currency is supported by a well-developed infrastructure that includes core payment systems, digital wallets and publicly accessible blockchain networks. Several pilot projects are also in the process of implementation in Shanghai, Guangzhou and Shenzhen. As a result, these cities will be among the first to adopt the new financial system.
What are the key takeaways?
In short, China’s digital currency will become a disruptive force in the global economy. It will drive high-end innovations in various industries such as banking, mobility, financial trading and insurance. However, there is no doubt that it will likely face its share of hurdles along the way and challenges related to operational testing and currency stability.
There will also be other challenges, such as whether the process of counterfeiting digital currency is accessible, what kind of financial measures should be taken to ensure the currency’s stability, etc.
How can China’s digital currency impact your business?
Many businesses in developing countries such as India and Indonesia are already utilizing mobile payments for peer-to-peer (P2P) transactions. However, these payments are still primarily cash-based. For example, nearly 90 per cent of all P2P transactions in India and Indonesia happen using cash. In addition, only around 25 percent of Indonesians with bank accounts have Internet access, and only 9 per cent use their bank accounts for making payments using their mobile phone or tablet.
The introduction of China’s digital currency system could significantly change how businesses in these countries receive customer payments. It will boost business growth, increase product and service sales, reduce costs and improve efficiency.
By introducing a digitized payments infrastructure, businesses can significantly reduce the cost of providing services to customers. New opportunities, applications and innovations are being created across various industries while public convenience and security are improving. With the inclusion of this cryptocurrency, financial inclusion in emerging markets is likely to grow faster.
How to know whether your business should accept digital Yuan?
It is very significant for business owners to be prepared for this development as it could potentially triple their revenue from China’s digital payments market by 2025. According to reports, the global spending power of China’s urban consumers is estimated to reach around the US $8 trillion per year by 2022. For businesses, this is a huge opportunity to grow.
Such a colossal market means that there is a lot of competition as well as convergence. With so much potential, it is easy to see that businesses can quickly lose to their competitors if they are not prepared. Therefore, business owners must know what steps to take when accepting digital payments and accept them only from legitimate customers.
Who will benefit by accepting digital currency?
China’s digital currency has long-term benefits for both large and small merchants. For small merchants, the introduction of a CBDC system could open up substantial new opportunities in China’s digital economy in all sectors, including logistics, retail and manufacturing, according to reports. Several firms that have already started accepting digital currency have seen exponential growth in their sales.
For example, a coffee chain café in Shenzhen sold over 3,000 cups of coffee in the first six months of accepting digital payments. In addition, because the users of China’s new payment system are mostly Chinese citizens and tourists, this new payment method can help increase your business’s exposure to potential customers from China.
Business owners will also benefit from cost reduction and financial savings. The various programs and measures introduced by the PBOC now allow merchants to receive interest on cash deposits or low-cost loans. At the same time, they wait for customers to pay using digital currency.