Chinese banks unveil CBDC hardware prototypes for multiple use cases

JD.com logistics worker
DIGITAL WAGES: JD.com has begun trialling digital yuan salary payments to some of its employees

The People’s Bank of China (PBOC) and the Industrial and Commercial Bank of China (ICBC) have unveiled prototype hardware devices that support the use of the digital yuan central bank digital currency (CBDC) across a range of different use cases.

The banks demonstrated the devices at the fourth Digital China Construction Summit in the city of Fuzhou, where ecommerce giant JD.com revealed that it had begun paying some of its staff in digital yuan and where both Ant Group and Tencent laid out their involvement in CBDC research and development programmes.

Hardware prototypes

During the two-day event, PBOC demonstrated a device for converting physical yuan and foreign currency into digital yuan and uploading them onto a CBDC hard wallet smart card.

“In the future, foreigners holding passports only need to put foreign currency into the machine and the machine will automatically spit out a digital RMB card,” Sina news service explains.

“The card also has a display screen showing the transaction amount and available balance, so it is also called a ‘visual chip’ wallet.

“With this wallet, foreigners can spend on terminals that accept digital renminbi payments.

“The application scenarios cover shopping malls, supermarkets, vending machines, transportation, education, medical care, farmer’s markets etc and it will be officially put into use at the Winter Olympics for the first time next year.”

ICBC demonstrated a device that enables users to exchange physical yuan —  in both coin and paper form — into digital yuan in either a digital wallet or a hard wallet smart card and can operate both online and offline.

The bank’s other prototype devices include “agricultural aid vending machines” that enable users to make digital yuan “public welfare donations on an ecommerce platform” and a “digital renminbi smartphone” that “can realise multiple functions such as hardware wallet issuance, wallet recharge and withdrawal, digital renminbi transfer and remittance, domestic and foreign currency exchange of digital renminbi, and provides a full range of digital renminbi services for disadvantaged groups in digital finance and short-term overseas visitors to China,” according to media outlet Mobile Payment Network (MPN).

It also showed a range of devices enabled for digital yuan payments, including “special-shaped hardware wallets”, “student watches” and “large-screen voice broadcast wallets”. According to MPN, these aim to “promote the implementation of hardware wallets in closed scenarios such as retirement communities”.

Digital payroll

The event also saw JD.com announce that, as well as accepting digital yuan payments from customers using its online shopping mall, it has started piloting digital yuan salary payments to some of its employees.

“In a test run that started in January, JD used the solution for payroll payment for some of its employees who are based in Shanghai, Shenzhen, Chengdu, Changsha and Xi’an. Employees can transfer the digital RMB to their regular personal bank accounts, or use it directly to make purchases via selected offline stores or JD’s online platform,” a JD.com blog post says.

“This payroll program improves efficiency for the payment process, especially when there is a need to pay multiple entities or transferring to other banks.

“A representative from the payroll department at JD Technology said, ‘The process is similar to paying by cash, and employees will receive the fund immediately, helping us to improve the process’.”

Strategic cooperation

Both Ant Group and Tencent confirmed their involvement as strategic technical partners in the ongoing CBDC pilot programme during the digital summit.

Ant Group revealed that it had signed a cooperation agreement with PBOC’s Digital Currency Research Institute in 2020 that will see “the two parties carry out exchanges and cooperation in the technical field and do not involve specific product selection”, Sina reports

“It is understood that this cooperation will be based on Ant Group’s independent research and development of distributed database OceanBase and mobile development platform mPaaS, and jointly promote the construction of a digital RMB technology platform.” 

“As an operating agency, Tencent directly participated in the presentation of the digital renminbi results.

“Since the launch of the digital renminbi project, Tencent has also been deeply involved in related design, R&D and operation work, providing support for the implementation of the digital renminbi,” Sina adds.

The announcement comes as Reuters reports that branches of China’s six major banks in Shanghai are “quietly promoting” the digital yuan by “persuading merchant and retail clients to download digital wallets so that transactions during the pilot programme can be made directly in digital yuan, bypassing the ubiquitous payment plumbing laid by tech giants Ant Group, an affiliate of Alibaba 9988.HK, and Tencent 0700.HK.”

All six state-owned Chinese banks began rolling out digital yuan wallets earlier this month.

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