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China’s e-CNY wallet app can now work offline allowing users to make payments where internet connection is poor or when their device runs out of battery. The country’s central bank has also announced plans to allow the central bank digital currency (CBDC) for investment purposes and to include it in its official money supply statistics.
Last week, Chinese media outlets announced the launch of a new feature that will allow the e-CNY app to send payments while offline, including when a device has no battery or no phone signal.
China Daily, a state-owned media outlet, reported that some e-CNY users had opened their wallet app to find that they can now activate an offline payments function using the "Payment Settings" menu.
The app update was limited to certain types of Android device, but it will be rolled out to other devices in future.
Jin Tian, senior researcher at the Digital Economy Research Institute at Zhongnan University, said the offline payment feature will benefit users in settings such as high-traffic areas, sports events or natural disasters, when power and/or signal can be disrupted.
For added security, the update automatically limits offline payments to 500RMB ($74) and up to ten transactions in total.
Beyond these parameters, according to China Daily, offline payments can still be initiated, but users will have to input their password into the receiver’s acceptance device.
Similarly, if an e-CNY user’s device is lost or stolen while offline payments are switched on, they can use someone else’s device to log in to their account and switch them off.
Yassine Regragui, head of marketing strategy and member of the digital euro task force at Worldline, welcomed the initiative as a step towards financial inclusion.
“This one-of-a-kind ‘hard wallet’ innovation will increase financial inclusion and help the unbanked and elderly generation have access to cashless payments,” he said, adding that there are “more CBDC innovations to come.”
The offline payment function that has been added to the e-CNY app uses near-field communication (NFC) technology, which is present in virtually all smartphones and smartwatches.
Both Google Pay and Apple Pay, for example, can be used to make payments when a user’s device is switched off or without signal, via the secure element in the phone which can still be detected by any receiving device.
e-CNY arrives in investment world
In other e-CNY news, Soochow Securities announced that China’s CBDC can now be used to make investment purchases through its mobile app.
As reported by the state-backed China Securities Journal, Soochow customers can now purchase investment and wealth management products using e-CNY through its partnership with the Bank of China.
The move is another milestone in the gradual extension of e-CNY to additional sectors of the Chinese economy, beyond its initial scope of retail and transportation payments.
As of December last year, the People’s Bank of China (PBOC) has also begun to include e-CNY in its data on currency in circulation.
Last week, the PBOC published its full-year financial statistics for 2022, showing that there is now RMB13.61bn ($2bn) in circulation in e-CNY form.
However, this represents just 0.1 percent of total currency in circulation.
In October last year, the PBOC said it had conducted e-CNY pilots in 15 provinces and municipalities, and has selected ten so-called “authorised operators”, including traditional commercial banks as well as the likes of WeBank (operated by WeChat Pay) and MyBank (operated by Alipay).
Supporting both wholesale and retail applications, the PBOC said that 360m e-CNY transactions had been made in the 15 pilot areas with a combined value of RMB110.04bn as of August 2022. In addition, more than 5.6m stores in these areas now accept e-CNY payments.
Going forward, the PBOC said it will focus on coordinating greater privacy protections for e-CNY users, on the principle of “anonymous for small-value and traceable for large-value transactions”.
