JD.com trials usage of digital yuan.

Digital currencies are being touted as the next big innovation in finance, and with the popularity of cryptocurrencies driving a lot of interest globally, many countries are also looking at launching their own versions of digital currencies. China is at the forefront of that, launching a new digital yuan, and this will actually be an interesting test case for the rest of the world to keep an eye on. One of China’s largest retailers, JD.com, actually gave consumers the first opportunity to try this new currency out during the Double Twelve festival.

The Double Twelve festival is an annual shopping festival which draws millions of shoppers every year to the site, thus making it the perfect opportunity to test the new digital currency. Known as the Digital Currency Economic Payment (DCEP), JD.com saw nearly 20,000 orders with the digital yuan in just one day. This was the first trial for an online shopping platform with the currency in China, and was a partnership between the People’s Bank of China, the local government in Suzhou and JD Digits, which is the financial branch of JD.com. Given that JD.com has over 440 million annual active users, this will be an interesting trial for the new currency, as well as allow for more spending to take place which could also stimulate the economy.

The government in Suzhou gave away 20 million yuan ($3 million) before the Double Twelve festival kicked off, to lure more users in. 100,000 red packets, each worth 200 yuan, were distributed. They are a very popular way to send money in China, and are used on various mobile payment platforms such as WeChat Pay and AliPay in China. This was just one of a number of trials for the digital currency which are being carried out in China to allow the country to move towards a cashless society and economy.

There are various applications and implications of this currency in the future. One of the biggest innovations being considered is in Macau, where the gambling regulator is looking to use the digital yuan as the base currency for the city’s various casinos. The digital yuan is officially considered legal tender since October all over China, so it would not be a problem from a monetary standpoint for Macau to do so. It would also be different to crypto gambling games which have begun to be quite common, just because the digital yuan is another version of the currency, rather than being a separate online currency altogether, outside the control of the central bank. The Chinese government has been conducting trials in Shenzhen and Suzhou to test the effectiveness of the digital currency. With regard to gambling in China, having the digital currency would reduce the need for Chinese gamblers to convert their money into Hong Kong dollars when playing in Macau. This would significantly reduce the number of currency conversion scams, as well as make it safer for them since they would not need to carry huge amounts of cash.

Trials are taking place in venues for the 2022 Winter Olympics in Beijing as well, and that could be a viable launch date for the currency, especially since the central bank is yet to provide an official timetable for the launch. The data from the trial on JD.com has shown that more than 80% of first-time users were born after 1980. Residents in Suzhou were also allowed to use the currency at JD.com’s offline stores, and other physical stores, in addition to the site. It will be interesting to see how this currency develops over time and how it is adopted by China.