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Since 2014, China’s Central Bank has been working on developing a digital currency. The project was part of the broader aim to build a new digital financial infrastructure of the country. China’s central bank announced that in 2019 there would be “a trial run for commercial tests for issuing central bank digital currencies,” which is expected to reach the market in 2020 after more testing and regulatory approvals. Still, it took one more year to launch the digital currency ultimately.
Factors Affecting Intention to Use e-Wallet:
- Perceived Usefulness:
A consumer’s intention will be positively influenced by perceived usefulness if consumers believe that using an e-wallet can achieve their goals. In addition, if e-wallets are considered more beneficial than cash and other alternatives, consumers will feel more motivated to adopt them. Thus, the more robustly consumers perceive the usefulness of e-wallets, the stronger their intention to use them.
- Perceived Ease of Use:
Perceived ease of use is defined as how easy it is for a user to operate and learn the functioning of a technology. Perceived ease of use is a negative predictor of intention to use an e-wallet because high perceived ease of use could also reflect a lack of perceived usefulness. As such, perceived ease of use can also be one factor that moderates choice and intention to try out e-wallets.
Credit Cards vs Digital Yuan: The differences
Credit cards are the most popular and well-established form of payment, having been used for about half a century. They are available in almost every country and can be used anywhere. It is also one of the easiest ways to make payments, offering quick and easy transactions.
Their downside is that you may be liable to pay vast sums of money if anything goes wrong with your card. Furthermore, credit cards offer high amounts of debt to those who use them excessively.
Digital yuan is a relatively new concept that has only been implemented in one country so far; it was first created by China’s central bank in 2021 as an alternative form of currency for transactions online. However, the concept is already beginning to revolutionize how people think and behave in China. Digital currency is an appealing option for many who do not have access to bank accounts and can be used by anyone with the internet, a smartphone (with a QR scanner), and a wallet.
Unlike credit cards, digital yuan cannot be used by people to get into debt; it cannot exceed the amount of money you have in your bank account or digital wallet. However, you can purchase items online or via mobile payments as long as they support it.
Digital Yuan benefits over a credit card:
- No risk of overdrawing your bank account:
Digital yuan is controlled and can only be used for online purchases. Therefore, if a customer overdraws on their account, they will only be able to buy something once they repay the amount owed.
- No hidden fees:
Credit cards can have hidden fees, such as those charged daily for paying interest, fees for buying items over a specific limit, or fees for purchasing foreign currency. These fees may go unnoticed initially but will likely bite you in terms of lost profits as time goes on.
- Low risk of fraud and identity theft:
Credit card fraud is also becoming more prevalent, so businesses are increasingly drawn to offering junk security services to tackle this issue, given that the digital yuan is a relatively new concept in the market. At the same time, credit cards have been around for a long time; it is unlikely that there will be any issues with either online retailers or banks over fake or malicious ID theft.
- No threat to physical security:
There are no fraud and identity theft threats to digital currency compared to credit cards. It makes it more secure than standard bank accounts, where customers may risk fraud and identity theft from external sources such as shoplifting, data breaches, etc. It is straightforward to use digital currency compared to traditional forms of payment such as credit cards and debit cards.
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