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Home » Business » Bank of China tests digital yuan SIM card payments using NFC technology
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How is your weekend going? FX market is closed and Crypto market is ranging after a pump and very likely we will see retracement. But I have got a news for you from China.
Here is it as fresh as the Italian Pasta off the Baker's Man Oven. This news is proudly brought to you by me and copied from Wahid Pessarlay
State-owned Bank of China has announced the launch of a pilot to test the practicality of linking SIM cards to digital yuan for offline payment functionality.
In a statement, Bank of China confirmed it will be teaming up with telecom giants China Telecom and China Unicom to launch a suite of products merging SIM cards to the central bank digital currency (CBDC).
Bank of China disclosed that its telecom partners will release a batch of SIM cards fitted with near-field communication (NFC) functions, a technology behind contactless payments. Participants of the pilot will be able to use their mobile devices to make digital yuan payments at point-of-sale terminals.
Through NFC, payments can be processed without needing an internet connection, with the bank saying that users do not need to open any payment applications. According to the statement, the offering will allow users to make payments even if their mobile phones are turned off.
The bank states that the SIM card payment functionality will use a shared balance, eliminating the need for separate account funding. Per the statement, the bank assured users of the safety and reliability of the offering, noting the integration of several guardrails against bad actors.
Currently, the pilot will only focus on Android devices in select cities across mainland China. Aside from integration with CBDCs, the bank stated that the SIM cards may support several applications, including access control, car keys, and a digital identity system.
Several countries building CBDCs have contemplated the idea of offline payments, buoyed by the benefits associated with the functionality. The central bank points to the perk of financial inclusion but note the absence of a technical standard for building the offering remains a stumbling block.
“We have studied the market—there are no ready-made or close to ready-made technological solutions,” said First Deputy Governor of the Bank of Russia Olga Skorobogatova. “For offline payment, you need to develop your own solutions. This is in our plans, but not at this stage.”
Following a dip in the digital yuan adoption rates, the People’s Bank of China (PBoC) has increased the pace of the CBDC pilot project by expanding to new cities. The central bank is currently experimenting with a cross-border functionality for the digital yuan after New Year subsidies, and the integration of the red envelope feature achieved moderate success.
In early July, Jinan city officials announced that it will begin accepting digital yuan as payment for bus rides across all routes to trigger adoption, with the city of Changsu paying staff salaries in digital yuan. The digital yuan has seen application in securities while the PBoC continues to test the waters with a push into nearby Hong Kong..............END OF NEWS!
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