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According to a recent article, the deployment of the much anticipated digital yuan in China could cost the country’s ATMs dearly, making them obsolete.
According to Chinese media Huo Long Guo Cai Jing, the ATM sector reached its peak in 2015, when some 252,000 machines were installed across the country.
However, since 2017, ATMs have been declining in the asian giant.
Rather than deploying more conventional ATMs, banks are instead looking to revamp older models or replace them with “smart” terminals that will be compatible with digital yuan transactions.
The media reported that a “project to transform the ATM system to be compatible with the digital yuan has already begun”.
However, updating all ATMs in China could cost up to $11 billion, a sum that could make the process too unprofitable to even consider. It might be simpler and cheaper to simply offer the classic services of ATMs with apps on a smartphone.
Earlier this year, Guangdian Express, the market leader in ATMs, said it had been involved in research and development projects with the digital currency research team led by the People’s Bank of China, and was also interested in hardware wallet technology. The same company has also developed its own blockchain technology solutions and works with a number of other government agencies.
However, as Tencent’s WeChat Pay and Alibaba’s Alipay electronic payment platforms together already account for 15% of all payments and money transfers in China, the digital yuan – which could eliminate much of the need for ATM financing – could well give the ATM sector another blow, this time a fatal one.
The adoption of cryptocurrencies is high in China, despite the fact that cryptocurrency exchange remains illegal. Over-the-counter (OTC) trading in cryptos continues to grow in China, and Bitcoin (BTC) and altcoins remain a popular choice for the nation’s middle classes, another factor that could further marginalize ATM-based finance.
The launch of the digital yuan is now “imminent,” a Japan-based Chinese observer said last week, with many private companies now involved in national pilot projects already underway and expansion plans underway.
The fate of ATMs in China can be used to predict what will eventually happen to those in the rest of the world and ATM providers and banks alike should already invest in new solutions to stay relevant in the future market where digital currencies will play a much more important role.