Chinese e-commerce platform Meituan is to enable customers of its bicycle hire service to pay for their rides with the country’s central bank digital currency (CBDC) while offline using an NFC-enabled digital yuan hard wallet.
The company is also distributing ‘red envelopes’ containing 10 digital yuan (US$1.55) to customers via its app that can be used to make rental payments for its bicycles in Beijing, Shanghai, Shenzhen, Suzhou, Chengdu and other major Chinese cities.
“The goal is to promote a reduction in carbon emissions whilst promoting the digital yuan,” according to a Ledger Insights report.
“After registration, users will immediately receive a 10 yuan red envelope and it’s possible to get cashback via additional red envelopes for their daily riding.
“Meituan is [also] cooperating with the Bank of China to launch an offline NFC payment function to hire its bicycles. Unlike the previous method of scanning the QR code, users with a digital yuan hard wallet can unlock the bicycle while offline and without a phone.”
Other use cases for the digital yuan due to be tested soon include payments for highway tolls and parking, local and international hotel bookings, and telephone charges.
The continuing expansion of trials for specific CBDC use cases comes as the People’s Bank of China reveals that its Digital Currency Research Institute (DCRI) is now actively exploring the use of blockchain technology for the issuance of digital yuan.
The DCRI is “building a unified distributed ledger based on the blockchain at the issuance layer, improving the efficiency of reconciliation; at the same time, with the support of the Bank for International Settlements Innovation Centre, the multilateral central bank digital currency Bridge Project explores the use of distributed ledgers; it has also built a trade finance blockchain platform,” DCRI deputy director Di Gang told the 2021 China Digital Finance Forum, Sina news agency reports.
Gang also pointed out, however, that blockchain technology is “not a panacea”, that “it is not very suitable for scenarios with high concurrency and high privacy and performance requirements”, and that the DCRI’s project represents “the starting point for the use of hybrid technology architecture for digital renminbi research and development”.
“The compatibility of blockchain and traditional technology integration is not high and there are technical frictions,” Gang said.
“It is necessary to strengthen the research on the inheritance and improvement of blockchain based on traditional technology and to strengthen the integration and innovation of new technologies.”
The People’s Bank of China issued its latest digital yuan trial progress report in July.