China 2020 – Goodbye Cash, Hello Digital Currency?

                by David Parmer / Tokyo

North Korean Supreme Leader Kim Jong-un says the DPRK may give the US a surprise “Christmas present” in 2019. This could be anything from a nuclear test to sending more long-range missiles out over the ocean or over Japan. Whatever Kim does will be “big news.” However, bigger and more important news seems to be forthcoming from China.

Reports suggest that China is on the verge of launching the world’s first central bank digital currency. The People’s Bank Of China (PCOB) has been working on digital currency for five years, and now a small-scale launch in the eastern cities of Shenzhen and Suzhou might be just around the corner.

While China is “pro” digital currency, it is “anti” crypto currency. China has banned Bitcoin and coin exchanges and has banned Initial Coin Offering (ICO) since 2017, and overseas exchanges are not able to serve Chinese customers.  

In October 2019 President Xi Jinping gave the green light to for further digitalization by stating that China should embrace the blockchain technology needed for digital currency. One big upside for China with the introduction of an accountable digital currency is to create the real possibility of the internationalization of the Yuan. This will aid in China’s Belt and Road scheme, and ultimately challenge the long time supremacy of the US dollar.

A national digital currency would go a long way to putting an end to China’s nagging problem of currency counterfeiting. Moreover, online payments in China are dominated by Ali Pay and We Chat Pay and the new currency would theoretically dovetail with this trend toward a truly cashless-society. 

The bottom line is that while the world might focus on Kim Jong-un’s dramatic antics toward the end of 2019, the really important developments are taking place in China without as much fanfare. Chia’s development and immanent launch of a secure, national digital currency leading to the internationalization of the Yuan is a story without fireworks, but one worth watching very closely.

(Compiled from online sources.)

Photo: DP/Tokyo

China Mobile Payments: Apple + Union Pay = Convenience and Security

                                      by David Parmer

Mobile and contactless payments for Apple users in China just got a lot simpler thanks to a 2016  agreement between Apple Pay and Union Pay. Now these Apples users can add Union Pay cards to their Apple Pay on iPhones, iWatch and iPad. The keywords are secure and convenient. In combination, Apple Pay and Union Pay’s Quick Pass provide payment tokenization for secure transactions. Contactless readers add convenience by letting the user simply put the Apple device near the reader or click the iWatch to make the transaction. Union Pay operates the country’s clearing and settlement system and issues cards. Union Card has issued 5 billion cards to date and the card is accepted in more than 150 countries.

While the tie-up is excellent news for Apple, it does not have an exclusive in the China market. Union Pay recently announced that it had also made a tie-up with Samsung for mobile payments. Some observers say Apple has nothing to worry about since Samsung seems to be in decline in the China market.

Apple does have to worry about local big-boy Alibaba, whose Alipay service now holds a huge chunk of the mobile payments market. Local player Tencent is also in the game through its We Chat app.

This year might be a very big year for Apple in China. It will be interesting to see, in say 12 months, how the mobile payments pie is sliced up.

Photo: Shanghai Apple Store, DP.