Do you know the relationship between central bank digital currency and mobile payment?

Time:2020-2-19

When it comes to digital currency, China’s central bank began to study it as early as 2014. Compared with Libra launched by Facebook in the United States, the digital currency of the central bank (DCEP) has entered the public vision for a long time.

With the progress of science and technology, money payment has gradually stepped from offline to online. With the emergence of mobile payment, the expression of money has also entered electronic. These platforms such as WeChat and Alipay not only change the convenience of people’s payment, but also change the way of money storage.

01 criticality of mobile payment

Since the rise of blockchain, the first impression will be digital currency, led by bitcoin, Ethereum and other mainstream currencies. However, the underlying development technology behind digital currency is not unknown. The same is true of China’s central bank’s digital currency (DCEP). For various reasons, it has not been disclosed to the outside too much since it was launched. In fact, the difference between the digital currency of the central bank and the current electronic payment is very obvious.

Electronic payment as Internet plus finance cannot do without the support of the Internet and finance in two aspects. However, in the process of payment, people always attach all kinds of praise words to some product R & D companies, but ignore the key role played by traditional financial institutions, such as banks, such as currency issuance, storage, exchange and transaction, which are often regarded as “rigid system” in the development process of mobile payment.
Specifically, traditional financial institutions mainly carry out the following important work:

One is to create bank accounts for mass users at low cost;

Second, provide transfer and settlement services for massive online businesses.

To be honest, without the support of these underlying work, mobile payment can not continue at all. When mobile payment is just opened, users need to bind their bank account with social media first. In other words, Internet products play the role of a front-end gateway in this process, and the relevant work of the back-end is completed by the bank. However, whether it is to create accounts quickly or to transfer funds and settle accounts, it seems that there is no economic benefit in business, but its cost is quite high. For example, to create an account, the bank needs to review materials, business card printing and issuing material costs, counter labor costs, ATM equipment costs, etc. So why are banks willing to do this thankless work?

In fact, China’s banks mainly rely on state-owned capital. However, state-owned capital often takes part of social responsibility. This is why China’s banking industry can dare to invest heavily in financial infrastructure, and open the payment interface under the requirements of the development of digital economy.

In fact, looking at the development process of mobile payment, we can find that financial enterprises are the biggest bottleneck of this business development. The popularity of Internet Finance in China is also due to the close cooperation between the Internet and the financial industry, as well as the perfect system and infrastructure, which promote the close cooperation between the Internet and finance.

This is not only the comprehensive electronization of payment experience, but actually the network of value circulation formed in the digital world. Only based on this network, it is possible to develop high-frequency online goods flow and service flow. In other words, electronic payment based on smart phones is a very important foundation for the development of digital economy.

In the past few years, people have experienced many entrepreneurial outlets, such as e-commerce, takeout, bike sharing, knowledge payment, etc., which are inseparable from mobile payment. Imagine that without the existence of these mobile payment means, people still stay in the stage of POS or even offline payment, so the online economic ecology may still be difficult to move forward.

02 positioning of digital currency

Since the emergence of blockchain technology, this situation has been completely changed.

For enterprises that want to develop in mobile payment but are trapped by local policies and industry entities, blockchain technology is the best way to save lives.

First of all, account creation can be completed on the digital wallet, and the difficulty of creating an account is very small. Even if it is a centralized trading platform, its KYC efficiency is relatively high, which is unmatched by the bank card review system in many countries.

Secondly, unlike the centralized bank transfer network, which can switch the payment interface at will, the decentralized blockchain network is open. Unless there is a manual review, any user can transfer the value freely on the blockchain network.

At the same time, the blockchain has the characteristics of non tampering, which has natural credibility and credibility for the record information of the account. This jumps over the two thresholds faced by the development of mobile payment.

Besides the difference of private key, transfer fee and arrival rate, the process of scanning the code with digital wallet is very similar to the process of scanning the code with Alipay and WeChat. Because these two products are essentially one kind of things, the difference is that one is based on the centralized Internet network, and the other is based on the decentralized network of blockchain technology.

It can be seen that blockchain has eliminated the development obstacles of traditional Internet finance industry in terms of mobile payment business. Due to the technical problems of transfer speed and private key verification, digital transfer may need some product optimization to be close to the current mobile payment experience.

Therefore, the biggest difference between the digital chain based on block chain and the Alipay currently used is:

For ordinary users, if they are in China, there is no difference in the front-end experience between the transfer funds on the centralized network or the decentralized blockchain when making mobile payment. But at present, there may be a corresponding handling fee, which is similar to that of the Internet. Theoretically, the operation cost of blockchain system is lower than that of traditional Internet financial gateway. On the contrary, in foreign countries, it may need POS machines. But in the long run, blockchain technology in foreign countries as long as transactions are reflected in the chain is no problem.

Therefore, based on the blockchain digital currency in China, on the one hand, it is to reduce the burden of financial institutions and the operating cost of the existing mobile payment system. On the other hand, let finance cover the world, based on the blockchain as the basis of mobile payment, promote the digital RMB to go to sea with the good payment experience brought by the blockchain mobile payment, and then improve the internationalization of RMB.

03 digital currency keeps pace with the times

The positioning of the central bank’s digital currency has been very clear, mainly based on the blockchain technology to enhance the internationalization of the digital RMB. However, in the face of the rapidly changing digital currency industry, it is difficult to determine whether its leader will make significant changes to the future currency positioning.

Before mobile payment is fully popularized, blockchain technology is not enough attention. At this time, the central bank’s digital currency can also reduce the paper money transportation cost of inter-bank clearing. With the launch of Libra by Facebook, the positioning of digital currency has changed greatly. Digital currency is not only embedded in the general user app of ICBC, but also developed based on blockchain technology. And in October this year, it was officially announced publicly.

04 at the end

The great adjustment of the central bank’s digital currency has aroused widespread concern around the world, causing a series of chain reactions in the entire international financial system. However, with so many variables and international financial storm, the prospect of digital currency is very bright. At the same time, the international monetary and financial transition, which is dominated by digital currency, has officially kicked off in this era.