Bank of China trials offline payments for digital yuan via SIM cards
The bank plans to enable users to make phone payments by integrating its digital yuan app with specialized “super SIM cards” with near-field communication capabilities.
The Bank of China, one of the largest state-owned banks in China, is currently conducting trials for a novel offline payment system that connects to SIM cards. This payment method is designed specifically for the digital yuan — China’s central bank digital currency (CBDC).
The July 10 announcement revealed the bank’s partnership with telecommunication operators China Telecom and China Unicom, and its intention to commence testing the next day.
The bank plans to enable users to make phone payments by integrating its digital yuan app with specialized “super SIM cards” with near-field communication capabilities. Users simply need to bring their mobile phones near the point of sale terminals for payment, eliminating the need to turn the phone on.
This integration allows transactions to be processed even when the phone is powered off. However, the bank stated that these SIM card payment functions will only be accessible on specific Android phones in a few test regions of China. In January of last year, the People’s Bank of China (PBOC), the country’s central bank, launched a trial version of a digital yuan app.
This follows China’s recent initiative to expand the use cases for its central bank digital currency for its Belt and Road Initiative and cross-border trades. The new experiment plans to extend digital yuan usage to pay taxes and utility services in the city in the future.
In the Chinese city of Guanzhou, it is now possible to pay for public bus rides with the digital yuan CBDC on 10 transit routes, which is a first for the country. To do so, passengers simply need to download the e-CNY app, deposit funds and scan the QR code located in the bus payment section to pay for their ride.
Related: Chinese city of Jinan accepts CBDC payments for bus rides
Meanwhile, Hong Kong in May launched an e-HKD pilot program after the Hong Kong Monetary Authority (HKMA) released a whitepaper in October 2021 on a potential retail CBDC. The HKMA, Hong Kong’s de facto central bank, said in a September consultation paper that it will explore the possibility of cross-border payments linking e-CNY and e-HKD.
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