The Chinese city of Qingdao is set to pilot an innovative electricity- and network-free digital yuan public transport payment solution, marking yet another milestone for the country’s central bank digital currency (CBDC) project. This news comes as another city in the pilot zone, Ningbo, announces plans to distribute around $140,000 worth of CBDC discount tokens in “lucky red” digital envelopes.
The Qingdao pilot, organized by the Digital Currency Research Institute of the central People’s Bank of China (PBoC), the PBoC’s Qingdao branch, the Qingdao Municipal Transportation Bureau, and the Qingdao Metro Group, will commence operations at Zhangcun Station and Keyuanjing 7th Road – two stations on Qingdao’s Metro Line 4. The project is jointly funded by the state-run Bank of China, as well as China Telecom, China Unicom, and a company called Digital Finance Public Service.
This pilot will enable digital yuan-paying customers to pay for transportation using their mobile devices, regardless of whether their phones are powered on or have network coverage. The solution leverages near-field communication (NFC) technology, a feature commonly found in modern smartphones. The PBoC introduced a function earlier this year that allows users of its digital yuan app to use their phones as a “hard” wallet via NFC technology; this solution, however, had not yet been adapted for use on metro networks. The pilot starting at Qingdao’s two stations on June 20th will change that.
To access this service, users need to add their China Unicom or China Telecom SIM card details to their PBoC or Bank of China’s software-based digital yuan wallets. Wallet balances will automatically be debited when users touch their smartphones – even if powered down – against card readers at the stations’ ticket gates.
Meanwhile, Ningbo is set to hand out approximately $140,000 worth of digital yuan coins in 20,000 envelopes, with each containing up to $11 worth of tokens. The catch is that these coins can only be redeemed as discounts when recipients spend between $14 and $28 of digital yuan at participating merchants in the city. The event is set to run from June 21st to June 24th, following in the footsteps of similar giveaways like the distribution of around $2.75 million worth of CBDC coins and coupons in Fuzhou late last year.
The potential widespread use of digital yuan in public transport and other everyday transactions could mark a significant leap forward in the adoption and prominence of central bank digital currencies. However, one must exercise caution regarding any potential challenges in implementing CBDCs on a mass scale. Will this path of integration and adoption continue, or will new hurdles emerge that threaten their progress? Only time will tell as pilot projects like those in Qingdao, Ningbo, and others unfold.
Source: Cryptonews
