China's Digital Yuan Fails to Gain Traction with Hong Kong Visitors – Is China's Digital Currency Facing a Roadblock?
Shenzhen, China has initiated a scheme to promote the usage of its digital yuan among Hong Kong tourists by providing them with physical cards and discounts. However, the initial response during the first few days appears to have been lackluster.
Per Shenzhen News, the country's first digital yuan hard wallet self-service card issuing machine was officially launched on February 22, providing "convenient" CBDC payment services for people coming to Shenzhen and Hong Kong.
The goal was to issue 50,000 digital yuan hard wallets until March 31. Yet, out of some 7.5 million Hong Kong residents, fewer than 1,000 have so far used this option. Citing data from the Shenzhen branch of the People's Bank of China (PBOC), the report stated that,
As of February 26, 625 Hong Kong residents have applied for a digital yuan hard wallet.
As part of the promotional efforts, users can get a 20% discount when spending at some 1,400 designated merchants in Luohu District with the so-called "Guangdong-Hong Kong-Macao Greater Bay Area-themed digital yuan hard wallet." Luohu is a district of Shenzhen on the crossing between Hong Kong and the mainland.
Tourists can get the "Greater Bay Area" physical card, issued by the Bank of China, within minutes at dedicated machines at the Loohu border crossing. It is topped up with an Octopus card, which is Hong Kong's dominant cashless payments system for public transport and retail, the South China Morning Post reported on Wednesday.
A branch official was quoted as saying that the bank planned to explore "more forms of digital currency wallets," including integrating wallets into SIM cards to enable visitors from Hong Kong to use the same card for communication and payment.
As reported, in mid-February, Shenzhen began a retail-focused "cross-border" digital yuan pilot with Hong Kong. The event was the brainchild of the central People's Bank of China and the Luohu District local government. The PBoC capped transaction sizes at 999 yuan (around $145).
Meanwhile, China's digital yuan adoption drive is also focusing on transport networks. Drivers have recently been green-lighted to use the token to pay tolls on some of the nation's busiest highways.
Furthermore, Changsha Huanghua International Airport, the airport that serves Changsha, Hunan Province, has become the first air terminal in the nation to allow transit passengers to use the token.
Earlier in February, media outlets in China claimed that electricity-free digital yuan payment adoption is taking off, with a growing number of "supermarkets, bookstores, self-service vending machines, and other outlets" accepting offline payments.
In September last year, a major commercial bank, the Industrial Bank, launched a digital yuan wallet business for users based in Hong Kong, Macau, and Taiwan. Should the Hong Kong and Macau pilots prove successful, the PBoC may well look to expand the use of the coin.
The Shenzhen branch of the PBoC reportedly spent around $83 million on digital yuan giveaways and other promotional activities for the token in conjunction with local government organs. That said, the project is still facing obstacles, both from the massive companies that are its competition (such as WeChat and Alipay), as well as the limitations to its use cases.
Over the past three years, China has expanded trials of the e-CNY to 26 cities and zones, with the size of digital yuan in circulation reaching 13.6 billion yuan ($2 billion) at the end of December, the SCMP reported, citing PBOC.
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