The People’s Bank of China (PBOC) is to enable participants in the next phase of its central bank digital currency (CBDC) pilot to test for the first time the use of digital yuan for making both online purchases and touch-based in-store offline payments.

PBOC’s second digital yuan ‘red envelope’ lottery giveaway will see the bank distributing 20m digital yuan (US$3.06m) among 100,000 randomly chosen lottery entrants in the city of Suzhou, enabling them to spend the e-yuan at some 10,000 designated bricks-and-mortar stores in the Suzhou area, as well as make online purchases from JD.com, the first Chinese virtual mall to support the CBDC.

A limited number of participants who receive a 200 digital yuan (US$30.62) red envelope will also be selected to test “an offline wallet experience” and make “dual offline payments” when their mobile device is not connected to the internet.

“This means that in this pilot activity, in a network-free environment, customers can use apps with digital renminbi offline payment functions to complete transfers or payments through mobile phones ‘touch one touch’,” PBOC’s Mu Changchun told the official Xinhua news agency.

The PBOC official did not specify whether the digital currency wallet’s offline payment functions are NFC-enabled, although the Xinhua news agency reports that “offline wallet experience activities have requirements for participants’ mobile phone hardware, and only mobile terminals of designated models can participate”.

In November, Huawei announced that the built-in digital yuan hardware wallet in its new Mate 40 smartphone supports NFC-enabled peer-to-peer transfers using the digital currency even when users are offline.

Shopping holiday

The digital yuan red envelope giveaway in Suzhou has been timed to coincide with China’s Double 12 shopping holiday on 12 December, but recipients will be able to continue spending their digital yuan until 27 December.

The Xinhua agency also says that two further state-owned banks, the Bank of Communications and Postal Savings Bank of China, will be joining the trial in the city in addition to the four state-owned banks that have already launched internal testing of the digital yuan. These are Bank of China, China Construction Bank, Industrial and Commercial Bank of China and Agricultural Bank of China.

The first red envelope lottery giveaway of e-yuan to 50,000 Shenzhen residents in October resulted in more than 60,000 transactions with a total value of 8.764m yuan (US$1.32m).

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