Bank of China, one of China's largest state-owned banks, is currently testing a novel offline payment system that connects to SIM cards. This payment method is designed specifically for the digital yuan, also known as e-CNY, which is China's central bank digital currency (CBDC) currently being tested.
This advertisement was made by the bank on Monday in a social media post, revealing its partnership with telecom operators China Telecom and China Unicom and its intention to start testing on Tuesday.
The bank plans to allow users to make phone payments by integrating its e-CNY app with specialized "super SIM cards" that have near-field communication capabilities. Users simply need to hold their mobile phones close to the point-of-sale terminals to make a payment, eliminating the need for the phone to be turned on.
This integration allows transactions to be processed even when the phone is turned off. However, the bank stated that these SIM card payment features will only be accessible on specific Android phones in some test regions of China. In January last year, the People's Bank of China (PBOC), the country's central bank, released a trial version of an e-CNY application.
This follows China's recent initiative to expand the use cases for your central bank digital currency for his Belt and Road initiative and cross-border trade. The new experiment plans to extend the use of the digital yuan to pay taxes and public services in the city in the future.
In the Chinese city of Guanzhou, it is now possible pay for public bus travel with the digital yuan CBDC in 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 payment section of the bus to pay for their trip.
Related: Chinese city of Jinan accepts CBDC payments for bus travel
Meanwhile, Hong Kong in May launched an e-HKD pilot program after the Hong Kong Monetary Authority (HKMA) published a whitepaper in October 2021 about a potential retail CBDC. The HKMA, Hong Kong's de facto central bank, said in September consultation document which will explore the possibility of cross-border payments linking e-CNY and e-HKD.
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