DBS Bank floats digital yuan offering for corporate clients in China

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Singapore-based DBS Bank (NASDAQ: DBSDF) has announced the launch of a new offering that will allow its institutional clients in China to receive payments in digital yuan from their customers.

The international financial institution disclosed the new offering via a post on its website, saying that the move will help Chinese businesses “meet growing consumer usage” of the digital yuan. DBS added that the offering is ready for a mainstream rollout after successfully completing a digital yuan transaction for a catering company in Shenzhen.

DBS Bank (China) Limited CEO Ginger Cheng remarked that launching a central bank digital currency (CBDC) collection offering and automated settlements will offer several benefits for its customers. Top of the list is the seamless reconciliation of consolidated merchant reports with itemized digital yuan transactions.

“The digital yuan merchant collection solution strengthens DBS’ position as an innovator in digital payment solutions, and marks yet another milestone in our vision of enabling instant and frictionless 24/7 payments for our customers,” said Lim Soon Chong, Group Head of Global Transaction Services.

Other benefits include providing access to payments from regions facing online banking limitations due to limited internet access. Firms will have the additional perks of receiving funds in government-backed digital currency “without having to go through manual settlement processes.”

DBS notes that its corporate clients will receive a robust onboarding service, including upgrades to point-of-sales systems for the new digital yuan offering. Furthermore, DBS and UnionPay Merchant Service, a technical partner for the offering, will carry out joint employee training.

The latest offering is not DBS’ first foray into innovative payment solutions after cutting its teeth through the launch of Partior to explore cross-border payment solutions. Since 2020, the bank has participated in a string of pilots involving the use of blockchain technology for payments.

At the moment, DBS is participating in several use cases in Project Guardian under the supervision of the Monetary Authority of Singapore (MAS).

Improving CBDC adoption

The People’s Bank of China (PBoC) is pulling several strings to improve the adoption metrics for the digital yuan. Apart from expanding the pilot to new cities, the central bank is encouraging its deployment in several facets of the Chinese economy, like securities and transportation.

China’s Changshu City announced in April that it would be paying the salaries of government employees in digital yuan to trigger increased CBDC usage. The city had previously hinted that it would begin accepting the digital yuan for tax and other utility payments after offering CBDC subsidies during the Chinese New Year.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

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