China's CBDC wallet relies on an age-old tradition to increase adoption.

The digital yuan wallet app now includes a traditional Chinese method of gifting money that has gone virtual with the rise of digital payments.

China's wallet app for its digital yuan central bank digital currency (CBDC) introduced a feature for users to send money in an electronic version of traditional "red packets" to try to attract new users.

The new feature was unveiled over the weekend, roughly one month before the Chinese New Year on January 22, according to the South China Morning Post on December 26.

The "red packets," known as hongbao in China, are traditionally used for gifting money during Chinese New Year and other celebrations as a good luck gesture. With the increased use of digital payments, popular local services such as WeChat Pay and Alipay have begun to offer virtual red envelopes.

According to reports, the e-CNY app allows a single red packet to be sent to a single person, or a "lucky draw" for a group of people to receive a random amount from a pool of funds; both WeChat Pay and Alipay have a similar feature.

Users can select a packet cover with well wishes for the new year, birthdays, or wishes for a "prosperous China."

On Oct. 10, digital yuan transactions surpassed the $14 billion (100 billion yuan) mark, representing a 14% increase from the $12 billion (87.6 billion yuan) reported by the People's Bank of China at the end of 2021.

According to a Dec. 18 report in the Chinese Workers' Daily newspaper, the e-CNY trails will be expanded to Jinan, Nanning, Fangchenggang, and Kunming. The trials were previously expanded in September to four provinces, including the most populous, Guangdong.

Despite the government's rapid expansion of trials, the most recent reported user base of e-CNY wallets was in January 2022, with 261 million users having created a digital wallet.

China's government appears to be forced to rely on WeChat Pay and Alipay to increase the adoption of its digital yuan.

According to financial reports, WeChat had 1.3 monthly active users in the September quarter, while Alipay had over 1 billion annual active users in its fiscal year ending Aug. 17, 2020.

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