To draw in more users, China’s wallet app for its digital yuan central bank digital currency (CBDC) added a function that allows users to transfer money in an electronic equivalent of traditional “red packets.”
According to a Dec. 26 article in the South China Morning Post, the new feature was published over the weekend, about one month before the Chinese New Year on Jan. 22.
The “red packets,” also known as hongbao in China, are customarily used for giving money as a sign of good luck during Chinese New Year celebrations and other occasions. Virtual red envelopes are now being given by well-known local firms like WeChat Pay and Alipay due to the growing use of digital payments.
According to reports, the e-CNY app allows a red packet to be sent to only one individual, or a “lucky draw” may be set up for a group of people to share a pool of money and receive a random sum. WeChat Pay and Alipay both reportedly have a function similar to this.
Users can select a packet cover that features greetings for a “prosperous China,” birthdays, and a happy new year.
In 2021, the first testing of the digital yuan began. E-CNY, however, has encountered numerous difficulties both at home and abroad. Despite this, the CBDC testing initiative has expanded to include additional provinces including its most populous, Guangdong and the cities of Jinan, Nanning, Fangchenggang and Kunming between September and December.
Although the number of digital yuan transactions has topped $9.7 billion (62 billion yuan) in 2021, its growth in 2022 was not significant. As a result, the government is looking for strategies to encourage the use of the new payment method.
How well are CBDCs accepted?
The advent of CBDCs has been met with a cold reception where most of the issuing countries have to go the extra mile to foster its adoption.
For instance, Nigeria. Nigeria, despite the partial ban placed on crypto by the central bank, has ranked as the 11th country in the Crypto adoption index as reported by Chainalysis. With this high ranking, the country’s CBDC has struggled to find a strong use case in the nation’s blockchain space. This has made the country take further steps to drive its mass adoption.
One of the moves dates back to August 2022 during the grand finale of the eNaira Hackathon which took place in the nation’s capital Abuja where the Central bank Governor, Godwin Emefiele announced the use of USSD codes for transacting the nation’s CBDC- e-Naira. The use of this USSD is to leverage the existing mobile banking technology used by traditional banks. This is to make the e-naira easily operable and accessible.
The CBDC programme of the Nigerian central bank has drawn close to 1 million participants. By the end of August of next year, the institution hopes to have 8 million customers. With an envisaged 81% mobile penetration rate (between August 2022 to August 2023), eNaira has a chance of becoming popular among the enormous underbanked population.
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