Electricity-Free Digital Yuan Payments Taking off in China – Report

Electricity-free digital yuan payment adoption is reportedly on the rise in China – where smartphone users can spend their coins without a network connection.

Earlier this year, the central People’s Bank of China (PBoC)’s updated the official digital yuan app. The update allows users to use smartphone hardware to access their token holdings when their handsets are offline.

Per the Economic Daily, one of China’s biggest state-owned newspapers, merchants need to upgrade the software on their point of sale (POS) devices to start accepting offline smartphone payments. And an increasing number of vendors are doing just that, the media outlet claimed.

The PBoC and partner banks have been working on “hard” digital yuan wallets for over two years. This began with a pilot conducted by the Postal Savings Bank of China at the Jiao Tong University School of Medicine’s Tongren Hospital staff canteen.

This is what China's digital fiat currency, DCEP or e-CNY, looks like in real-world use. pic.twitter.com/gITUG6HF2v

— cnLedger (@cnLedger) January 6, 2021

Wearable wallets were showcased at the Winter Olympics in Beijing last year. A wider range of wearable digital yuan wallets is being prepared for the Asian Games in September this year. The event will be China’s first major international sports event since the outbreak of the coronavirus pandemic.

But the smartphone-based hard wallet is a more recent innovation. It makes use of near-field communication (NFC) technology. Most modern smartphones – and some SIM cards – feature NFC hardware components.

Most POS devices also have NFC functions, too. And that means that temporary network or power outages would not necessarily cause major issues for digital yuan users.

Users’ “hard” wallet balances are updated when they power up their devices and restore network connections.

More Electricity-/Network-free Digital Yuan Pay Options on the Way in China?

An official from the Industrial and Commercial Bank of China’s digital yuan team stated that “all POS machines” that have “NFC functions” can accept offline payments – provided they upgrade their software.

The banker claimed that a growing number of “supermarkets, bookstores, self-service vending machines, and other outlets” were already accepting offline payments using the token.

And the banker added that “more options” will soon be available for network and electricity-free digital yuan payments.

The PBoC also stated that “various forms of hardware wallets” would “be launched” to “explore software and hardware integration possibilities.”