The People’s Bank of China (PBOC) is to follow its pilots of NFC-based contactless digital currency payments with the distribution of a further 20m digital yuan (US$3.1m) in a third ‘red envelope’ lottery to be held in the city of Shenzhen.
Recipients will be able to spend their central bank digital currency (CBDC) across more than 3,500 designated businesses in the city’s Longhua district as part of the Spring Festival which takes place from 1-9 February, state-run news agency Xinhua reports.
The trial follows rapidly on from the second digital yuan giveaway in Shenzhen, which ended on 17 January and saw the total value of transactions in the digital currency top 18m yuan (US$2.78m) across 11,000 retail outlets.
Participants in the second trial were able to recharge their digital yuan wallets as well. Those choosing to do so added a total of more than 1.5m digital yuan.
The second trial also saw merchants implementing three categories of payment acceptance method for digital yuan, including NFC.
“The first category is for large merchants such as supermarkets and shopping malls,” China Construction Bank’s Li Yixin told Beijing News.
“Their original payment method is a contactless payment. We provide them with the digital RMB interface, which can be completed by system upgrade.
“The second type is a common POS machine, which now also supports the NFC touch function; the third type is a static code tag used by a small retail store.
“After becoming our merchant, a code will be generated and scanned by the customer. It has an NFC tag attached.”
During these large-scale trials of the CBDC, participants have tested a variety of payment methods including in-store QR code and NFC, online ecommerce in the JD.com virtual mall as well as offline payments and ATM transactions.
PBOC has also tested the use of digital yuan to make NFC payments with a ‘hard wallet’ contactless smart card in Shanghai and with a variety of wearable devices in and around the 2022 Winter Olympics complex in Beijing.
The bank revealed that it was adopting a “two-tier design framework” for the CBDC and “a centralised design approach, which will record all transactions of the digital currency in the central bank’s own ledger” in November 2020.