What is the Digital Yuan (e-CNY)?
What is the Digital Yuan (e-CNY)?

What is the Digital Yuan (e-CNY)?

The digital yuan, also known as the e-CNY, e-RMB, or Digital Currency Electronic Payment (DCEP), is a digital version of China's national currency, the renminbi (RMB). It is issued and backed by the People's Bank of China (PBOC), the country's central bank. It is the first digital currency issued by a major economy.

While the digital yuan project may seem like a new concept, it doesn’t require everyday users in China to adjust to new technology. In China, mobile digital payment systems have already seen widespread adoption, thanks to the early development of Alipay (launched in 2004) and WeChat pay (launched in 2013). China has long been the world leader in mobile payments, with 88% penetration rate of mobile payment amongst the population in 2021 according to Statista.

The digital yuan payment system operates in much the same way as these pre-existing mobile payment systems and the adoption of the digital yuan has been smooth in pilot programs across China. The digital yuan project is a way for the Chinese government to create financial infrastructure independent of technology companies.


Research into the digital yuan began in 2014. By 2017, the Chinese government approved of the development of digital yuan, involving companies such as Alibaba, Tencent, JD.com, Huawei, and UnionPay.

The digital yuan was officially released in 2019. Today, the pilot projects have expanded to various cities and provinces across China and has seen widespread use during the 2022 Winter Olympics. At the end of 2022, pilot programs were launched in a total of 17 provinces, regions, and cities.

How Does the Digital Yuan Work?

From a technical point of view, the digital yuan is similar to Bitcoin and other digital currencies in that it operates from a digital ledger. That’s about where the similarities end, however. While Bitcoin and associated digital currencies are decentralized digital ledgers, the digital yuan is centralized, and maintained by the PBOC as opposed to a distributed system of users. The creation of new digital yuan operates according to the same standards and principles as printing new RMB.

For everyday users, the digital yuan works like other mobile payment systems, offering a similar user experience to those familiar with Alipay and WeChat pay.

Advantages of the Digital Yuan Over Existing Mobile Payment Systems

One of the main advantages of the digital yuan is its smooth integration with pre-existing mobile payment systems, which have proven to be more efficient and convenient than physical cash payments. It also can potentially reduce the cost of financial transactions and make them more secure, as it can be more difficult to counterfeit a digital currency than physical cash.

However, the digital yuan technology also provides new opportunities to improve over mobile payment systems.

The digital yuan’s payment system leverages Near Field Communication (NFC) technology, allowing users to make payments by tapping their phones or other devices together without needing to be connected to the internet.

NFC technology also means that digital yuan payments don’t require smartphones. A digital wallet can be linked to “dumb phones”, or as people in China call them, “senior phones”, mobile phones with limited or no internet capability. A digital wallet can also be linked to various cards and ID documents. This technology means seniors and those without access to smartphones can interface with this new infrastructure easily.

While opening a digital yuan wallet initially required registration with a bank account, the digital yuan has been decoupled from banking institutions, allowing for the most basic level of digital yuan wallets needing only to be linked only to one’s mobile number. This allows digital wallets to provide safety from banking failures and decreases the chances of bank runs during any potential financial crisis. While today most people depend on banks to store their money, as stashing cash at home is unsafe, with digital yuan wallets, people will have the option of keeping large sums of cash in their digital wallets.

The decoupling of the digital yuan wallet from banking institutions also helps tourism. When foreigners visit China, they often have a hard time opening a bank account, leaving them unable to access domestic mobile payment platforms such as Alipay and WeChat pay, which require users to link their accounts with a Chinese bank card. With digital yuan wallets linked to a person’s ID, this allows for foreigners without Chinese bank accounts to access China’s ubiquitous mobile payment infrastructure.

While mobile payments have wide adoption in China for interpersonal payments and small transactions, enterprise transactions still require traditional online banking. With the digital yuan, enterprise transactions will also see the advantages of mobile payment.

For current mobile payment platforms such as WeChat Pay and Alipay, users must pay withdrawal fees whenever they withdraw funds and transfer funds between platforms. With digital yuan wallets, this is no longer be an issue as digital yuan is essentially cash. This will be especially useful for merchants accepting payment in digital yuan.

How Can I Start Using the Digital Yuan?

Using the digital yuan requires a digital yuan wallet. Currently registration is only available to those living in the pilot cities.

To start using the digital yuan, follow the below steps:

  1. Download the E-CNY application from the app store.
  2. Sign up for an account via SMS verification.
  3. Select the “Open or Add Digital Wallet” option
  4. Choose a commercial bank (it is best to choose a bank you have a card at already, but it’s actually not necessary to use a bank card to begin using the wallet).
  5. Name your wallet and set your password and payment PIN.

There are four wallet levels, with the fourth class being the most basic and the first-class being the most fully featured.

With the above steps, users already have a fourth-class wallet and can receive and send digital yuan. A fourth-class wallet has an upper limit balance of 10,000 yuan and 2000-yuan cap for transactions. The fourth-level wallet is mostly anonymous, requiring only to a mobile number to create and use.

To top up digital yuan into a fourth-class wallet, users can use mobile banking to bypass the need to link their ID and bank card.

Users can link their ID and bank card to access more functionality and increase the balance and transaction cap.

To access more functionality and increase the balance and transaction cap, users can link their ID and bank card.

To gain access to the first-class wallet, which has no restrictions on balance and transaction size, requires one’s full ID documents, bank card, and an on-site interview with operating agencies.

How Can Merchants Start Using the Digital Yuan?

The digital yuan brings perhaps the biggest welcome change for merchants. No longer do they need to pay transaction fees nor deal with clearing agencies.

There are two main types of partners for merchants looking to set up a digital yuan wallet. One type is designated operating organizations, which will actively contact merchants for unique application scenarios. The other type is “2.5 tier organizations”, third-party service organizations designated by the Digital Currency Research Institute, that can assist merchants in accessing digital yuan payment systems.

Some of the designated operating organizations include the Industrial Commercial Bank of China, Bank of China, Agricultural Bank of China, China Construction Bank, Bank of Communications, Postal Savings Bank of China, and MYbank (Alipay), China Merchants Bank, and WeBank.

The business cooperation process between merchants and these operators looks like this:

  1. Merchants choose one or more operating agencies to communicate how they want to work together.
  2. After reaching an agreement, they sign a confidentiality agreement.
  3. The operating agency provides a contract template to the merchant and agrees on contract terms such as a settlement.
  4. Both parties confirm the contract’s content and submit it to legal affairs for review.
  5. After passing the review, both parties stamp their respective official seals
  6. According to the bank’s requirements, the merchant provides the corporate wallet information and sets it as the wallet for receiving digital yuan payments. The corporate wallet will serve as the main wallet and merchants can create sub-wallets if necessary.

2.5 tier organizations currently include Property & Credit, UnioinPay Commerce, Lakala, Lianlian Payment, PetroChina, and Sinopec. These organizations generally choose smart cities and transportation services to work with.

Cooperation between merchants and 2.5 tier organizations looks like this: The 2.5 tier organization will provide technical and IT services for merchants to begin receiving digital yuan payments. They help provide merchants with a connection to the Digital Currency Research Institute Interconnection Platform.

Merchants currently have the option of four methods of digital yuan payment interface:

1. H5 payment

More applicable to merchant virtual account top-ups scenarios.

2. Password-free payment protocol

Suitable for use in transportation scenarios (subways, buses)

3. Sub-wallet Payment

Suitable for transactions on merchants’ own platforms.

4. App payment

Similar in principle to WeChat Pay and Alipay.


If you're interested in learning more about how your business can accept and use the digital yuan, consider reaching out to our agency for help. We specialize in setting up e-commerce solutions that accept the digital yuan as a payment option. Our team of experts can help you navigate the process of integrating this new form of currency into your business operations. We have the knowledge and experience necessary to make the transition smooth and hassle-free. Contact us today to learn more and see how we can help your business take advantage of the benefits of the digital yuan.

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