People’s Daily: New option for digital RMB payments when there is no internet access
The digital yuan supports “offline” payments and can be used in airplane cabins, on fast-moving high-speed trains, in basements and other places without or with weak Internet access. Experts say the digital Yuan is being tested in Shenzhen, Suzhou, Xiong’an New Area in Hebei, Chengdu and the future Winter Olympics in a closed internal pilot.
Just in the past year of 2020, digital Yuan has attracted much attention from society. Many people are curious: what is digital Yuan? How is the payment experience? How will it affect our lives? Around these questions, reporters recently interviewed consumers, merchants and relevant experts.
RMB in the “digital wallet”
Digital RMB payment experience is smooth and you can pay without internet
Digital RMB is getting closer and closer. Since the second half of 2020, the digital RMB has been tested on a large scale pilot in Shenzhen and Suzhou to an undirected public. During the pilot, many consumers have already “tried” this payment method.
On December 11, 2020, Ji Li, who works in a technology company in Suzhou, was having breakfast at home when his cell phone on the dining table vibrated a few times. Glancing at the text message that popped up on his phone screen, he was extraordinarily excited: “I won the digital RMB consumption bonus!”
That morning, many other Suzhou citizens were as excited as Ji Li. 100,000 consumer red envelopes were distributed to eligible citizens during the 2020 “Double 12 Suzhou Shopping Festival” in the form of a “lottery”, with each red envelope containing 200 yuan of digital RMB. The winning citizens followed the guidelines and opened a digital wallet on their cell phones to receive the red packets. The digital RMB in the red packets can be spent at designated offline merchants in Suzhou and also online.
How should I spend the digital RMB in my hands? Ji Li’s idea was a bit “bold”: to be the first lucky person to spend digital RMB on an online e-commerce platform. “The campaign officially started at 8 p.m. on Dec. 11, 2020, and I was waiting with my phone at 7:30 p.m.” Ji Li said he purposely picked a battery online that cost only 17 yuan, and he cherished the “hard-earned” digital RMB.
Open the shopping cart, pay now, select digital RMB payment. Ji Li was already busy as soon as the hands of the clock pointed to 8 o’clock. “I paid while checking the time, the order was successfully placed at 8:0:32, and the payment process is very similar to using mobile payment tools.” He said he was impressed by the convenient and smooth payment experience of digital RMB, even though he didn’t end up being the first one to use digital RMB online. In the following period, Ji Li used the digital RMB to eat beef brisket noodles at a snack bar and buy a notebook at a supermarket …
Unlike Ji Li’s online experience, what Suzhou citizen Li Yichen has been waiting for is the “offline” payment function of digital RMB. The so-called “offline” payment refers to the way to verify the user’s identity, confirm the transaction information and make payment in the digital wallet without connecting to the back-end system under the condition of no or weak network. In short, it means that payment can be made without the Internet.
How is the experience of “offline” payment? In a beverage store on the first floor of the Prosperity Center in Suzhou’s Xiangcheng District, Li Yichen and the store owner first adjusted their respective phones to flight mode, then the store owner entered the payment amount of 35 yuan in the digital wallet, and Li Yichen opened the payment page in the digital wallet, the two phones touched each other, and with a “whoosh” sound, the digital RMB payment was completed. It took less than 2 seconds. “The whole payment process is very smooth, just like taking out cash from your own pocket and putting it into the shopkeeper’s pocket, no more holding up your phone and looking for the internet.” Li Yichen said.
Offer new payment options
Goods and services that can be purchased with cash and mobile payment tools can be purchased with digital RMB in the future.
Data shows that about 13% of China’s residents currently pay mainly through cash; in the third quarter of 2020, mobile payments amounted to 116.74 trillion yuan, up more than 35% year-on-year. “The people currently prefer to choose cash, bank cards and mobile payments. In the future, digital RMB is expected to provide a brand new payment option.” Dong Ximiao, the chief researcher of China Merchants Union Finance, said.
Some people worry that paper money will gradually disappear after the digital RMB is issued. Liu Xiaochun, vice president of the Shanghai New Financial Research Institute, said the public has different payment habits, some elderly people still have a strong demand for paper money, and the People’s Bank of China is not issuing digital RMB to eliminate physical forms of cash such as paper money. “The People’s Bank of China will not stop the supply of paper banknotes as long as the people have the demand to use them. In the foreseeable future, digital RMB and banknotes will co-exist for a long time.” Mu Changchun, director of the People’s Bank of China’s Digital Currency Research Institute, said.
What is the difference between digital RMB and the commonly used mobile payment tools? In this regard, Mu Changchun said that digital RMB and mobile payment tools are not in the same dimension. Mobile payment tools are the financial infrastructure, the wallet, while digital RMB is the content contained in the wallet.
Yi Gang, governor of the People’s Bank of China, said that currently, the digital economy is an increasingly important driver of global economic growth. The development and application of legal digital currency are conducive to efficiently meeting the public’s demand for legal tender under the conditions of the digital economy, improving the convenience, security and anti-counterfeiting of retail payments, and boosting the accelerated development of China’s digital economy.
“With the growing importance of mobile payments, the People’s Bank of China needs to promote the payment system to keep up with the times and introduce digital RMB as a pure public product through top-level design to become an important supplement to electronic payments.” Liu Xiaochun said.
“When users currently use mobile payment tools, they are essentially making payments based on their bank accounts. In the future, digital RMB gives users new options beyond cash, bank cards and mobile payments.” Dong Ximiao said.
What can digital RMB be used to buy in the future? It is understood that during the pilot period alone, there are more than 10,000 consumer-side merchants in Suzhou that can use digital RMB consumer bonuses, covering a variety of categories such as shopping malls and supermarkets, daily retail, food and beverage consumption, and lifestyle services. The Institute of Digital Currency of the People’s Bank of China has also recently entered into strategic cooperation with companies such as Jingdong Digital Technology and DiDi Travel, and digital RMB is expected to have more online consumption scenarios in the future.
“Under the premise that technical conditions are available, goods and services that can be purchased using cash and mobile payment tools can be purchased in digital yuan in the future.” For example, it’s winter and some skiers like to go to ski resorts to show off their skills, Zhou Liping said. In the future, people can use digital RMB to buy tickets to ski resorts and pay for food and drink. Recently, participants in the test used digital RMB to buy subway tickets for the Beijing Daxing Airport Line and experienced using the digital RMB wearable device wallet to “touch-to-pay” to enter through the subway gates.
Bringing a better payment experience
You can enjoy financial services such as payments without a bank account
How will digital RMB affect our lives? Experts say that for ordinary people, digital RMB will enhance the payment experience of users to a certain extent and also help enhance the universality and inclusiveness of financial services.
— Digital RMB is expected to bring a better payment experience to users.
“Although mobile payment tools can provide a better payment experience in most cases, there are still some problems.” For example, some merchants selectively accept mobile payment tools, Dong Ximiao said. Most of the fruit stalls on the roadside are posted with QR codes of mainstream payment tools, so if consumers do not download these tools, it is difficult to complete the payment. For example, the use of mobile payment tools must rely on the network, in the absence of network or weak network conditions, the payment experience will be poor.
“The digital RMB and mobile payment tools are similar in the way they are used, and both support various payment methods such as sweep code payment and near-field payment.” However, compared with the current mobile payment tools, the digital RMB supports “offline” payment function, so it can still be used normally in the cabin of airplanes, on fast-moving high-speed trains, in basements and other places with no or weak network, which will greatly enhance the payment experience of users.
From the pilot situation in Suzhou, digital RMB is quite popular among merchants. Mr. He, the person in charge of Huawei store in Suzhou’s Xiangcheng District Joy Plaza, told reporters that whether consumers choose to use POS machines to swipe their cards or mobile payment tools for payment, merchants will be charged a certain handling fee, while digital RMB currently has zero handling fee and real-time arrival for merchants, which provides a lot of convenience for merchant operations and saves financial costs.
— Digital RMB helps enhance the universality and inclusiveness of financial services.
Digital RMB is based on a broad account system and supports the loose coupling of bank accounts. Experts explain that this means that users who do not have a bank account can also use their cell phone number and other unique identifiers to open a digital wallet and make payments using digital RMB.
“After the issuance of digital RMB, people in some rural areas and remote mountainous areas can enjoy financial services such as payments through digital wallets even if they do not have bank accounts, which helps enhance the universality of financial services. For foreign visitors to China who do not have domestic bank accounts, they can also make small payments by opening digital wallets.” Dong Ximiao said.
Looking back on history, the People’s Bank of China (PBOC) was one of the earlier institutions in the world to start research work on legal digital currency. In 2014, the PBOC started special research on the framework of digital currency issuance, key technologies and other issues. In late 2017, with approval, the PBOC organized some commercial banks and relevant institutions to jointly carry out research and development of the digital RMB system. So, when exactly will the general public really be able to use the digital RMB?
Experts say the digital RMB is first being tested in internal closed pilot tests in Shenzhen, Suzhou, Xiong’an New Area in Hebei, Chengdu and the future Winter Olympics scenario to test theoretical reliability, system stability, functional usability, process convenience, scenario applicability and risk controllability. “The current pilot test of digital RMB is just a routine work in the R&D process, it does not mean that digital RMB is officially landed and issued, and there is no timetable when it will be officially launched.” Zhou Liping said.
It is expected that in the near future, the digital RMB will really come into people’s lives.
Article from People’s Daily
Translated by Yang(Mengyan Finance)