Can a digital yuan break Alibaba´s and Tencent´s payment dominance?

The People's Bank of China (PBOC) reportedly plans to use its central bank digital currency, formally known in China as the Digital Currency Electronic System (DCEP), to target the dominance of tech giants like Alibaba and Tencent in the digital payments sector, said the Financial Times. The report comes a few days after China's top antitrust authority filed for an investigation into China's two largest digital payments providers, Alipay and WeChat Pay, for exploiting their dominance to suppress competition. For more than a month, the agency has been collecting information on Alipay, which is owned by Ant Group, the fintech subsidiary of Chinese e-commerce giant Alibaba, and Tencent's WeChat Pay. According to a Reuters report, Ant Group and Tencent lobbied government officials last week to prevent an investigation. Thanks to the green light approved by former PBOC Governor Zhou Xiaochuan, Alipay and WeChat Pay have become top players in the field despite constant complaints from Chinese banks and the Chinese Banking Supervision Commission. Now the central bank will use the DCEP to provide banks with equal opportunities in digital payments, as it used to do with technology giants, the Financial Times reported, citing several officials familiar with the central bank's strategies. China's central bank launched the digital currency project in 2014 and accelerated its development amid the COVID-19 period. In April the project reached a new milestone by starting the first trials with the digital RMB in four cities - Shenzhen, Suzhou, Chengdu and the Xiong'an New Area near Beijing. The bank recently partnered with Chinese bicycle giant Didi and food delivery platform Meituan Dianping to test the use of the digital currency. China's mobile banking market saw transactions valued at approximately 56.2 trillion yuan ($ 8 trillion) in the last three months of 2019, according to Chinese consulting firm Analysys. She estimates that Alipay controls 55% of the market while WeChat Pay has a 39% share.