Bank of China, one of China’s largest state-owned banks, is currently conducting trials for an innovative offline payment system that utilizes SIM cards. The system is specifically designed for the digital yuan, also known as the e-CNY, which is China’s central bank digital currency (CBDC) currently undergoing testing.
In a recent social media post, the bank announced its partnership with telecom operators China Telecom and China Unicom, revealing their intention to commence testing the system. By integrating the bank’s e-CNY app with specialized “super SIM cards” featuring near-field communication capabilities, users will be able to make payments using their mobile phones. Notably, the phone does not need to be turned on; users only need to bring their phones near the point of sale terminals for payment.
The integration of the e-CNY app with these SIM cards enables transactions to be processed even when the phone is powered off. However, the bank clarified that this payment function will only be accessible on select Android phones within specific test regions in China.
This initiative follows the People’s Bank of China’s launch of a trial version of the e-CNY app in January of last year. China has been actively expanding the use cases for its CBDC, particularly through initiatives like the Belt and Road Initiative and cross-border trades. In Guanzhou, for instance, the digital yuan can now be used to pay for public bus rides on 10 transit routes, marking a significant milestone in the country.
Additionally, Hong Kong launched an e-HKD pilot program in May after the Hong Kong Monetary Authority released a whitepaper exploring the potential for a retail CBDC. The consultation paper stated the intention to explore cross-border payments between the e-CNY and e-HKD.
Bank of China’s trials of offline payments for the digital yuan via SIM cards demonstrate the ongoing efforts to promote the adoption and usability of China’s CBDC. By leveraging mobile payment solutions and integrating the e-CNY app with specialized SIM cards, the bank aims to provide convenient and secure payment options for users while expanding the reach of the digital currency.