Chinese banks have joined a government initiative to add support for payments made using China’s central bank digital currency (CBDC) to physical state-issued social security cards, according to local media reports.

Chinese residents can already make payments with the card — which also serves as an identity certificate and information record — across a range of use cases including urban transport and medical fees, but the country’s Ministry of Human Resources and Social Security now plans to add a function to the card that will enable holders to opt to make payments with the digital yuan.

“Commercial banks have begun to explore the layout of ‘social security card + digital renminbi’,” Chinese news outlet Economic Daily reports. 

“For example, the Bank of China has designed a third-generation social security card loading digital RMB hardware wallet solution to further explore and improve the application and promotion of urban public service carriers based on personal social security digital identities, so as to give the masses more convenience and benefits.

“According to Li Xin, chief business manager of the Digital Currency Office of the Bank of China, the third-generation social security card designed by the Bank of China to load the digital renminbi hardware wallet will not only stay in the form of a physical card, but will also plan to launch a variety of new scenarios.

“The new forms of crowd use, such as bracelets, portable tags etc, will expand the usage scenarios to people’s livelihood consumption scenarios, elderly care scenarios, bill payment scenarios, transportation scenarios and treatment-receiving scenarios, and will serve a wider range of social groups.”

“As a supply-side financial innovation tool, the digital renminbi is highly efficient, convenient, stable, safe and widely applicable, and it naturally fits the new requirements of a social security system that covers the whole people, balances urban and rural areas, is fair and unified, is safe and standardized, sustainable and multi-level. The deep integration of digital renminbi and social security is in line with the trend and direction of the development of the digital economy.” Li Xin told the news outlet.

The city of Jinan began accepting digital yuan for bus fare payments earlier this month and Qingdao Metro launched the country’s first offline CBDC transit ticketing pilot in June.

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