Chinese mobile carriers China Telecom and China Unicom, along with the Bank of China, are promoting a hardware version of the country’s digital currency, known as a SIM-based e-CNY payment service. This new offering serves as an alternative to existing mobile payment apps.
With the official e-CNY app and digital currency wallet embedded in mobile apps struggling to gain traction among consumers, the SIM card-based payment was recently introduced at a conference in Beijing as a viable alternative.
China Telecom, China Unicom, and the Bank of China emphasized that the SIM card wallet enables payment without the need for an internet connection or even battery power. The “e-CNY hard wallet” was one of the main products showcased at the 2023 China Digital Finance Forum.
The SIM card was launched in July by the Bank of China and the two mobile carriers. It has since been tested in various consumer-facing scenarios, including subways and universities, in multiple Chinese cities.
For instance, in the subway stations of Qingdao in eastern Shandong province and Suzhou in Jiangsu province, individuals with e-CNY accounts and SIM cards in their phones can simply tap their phones to pay for metro fares. These payments can even be made without an internet connection or power.
The Bank of China stated that the “e-CNY hard wallet” offers several advantages, including enhanced safety, reliability, and convenience.
“SIM cards are the most widely-used secure hardware medium… customers can make payments anytime and anywhere, which reduces costs and enhances the universality of e-CNY usage,” explained the Bank of China in a statement during the product’s launch in July.
The China Digital Finance Forum, themed “integration and evolution: to build a new ecology of digital finance,” was co-organized by various official agencies, including the Beijing Municipal Bureau of Local Financial Regulation and Supervision, the government of Fengtai District in Beijing, and the Digital Currency Research Institute of the People’s Bank of China (PBOC).
Additionally, the event featured other fintech offerings, such as an e-CNY smart contract product and solutions for cross-border e-CNY payments.
The PBOC initiated trials of the e-CNY at the end of 2019, selecting cities based on factors like major national development, coordinated regional expansion strategies, as well as location-specific industrial and economic factors.
However, the technology behind the e-CNY remains opaque. Although the digital yuan is not minted on a blockchain, it has been made compatible with cross-border programs like the mBridge with Hong Kong.
In September, Mu Changchun, the head of the Digital Currency Research Institute, called upon commercial mobile payment providers, such as Tencent Holdings’ WeChat Pay and Ant Group’s Alipay, to work towards improving their interoperability and unifying quick response (QR) codes for e-CNY payments. – South China Morning Post
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