China has rolled out new upgrades to its central bank digital currency (CBDC), offering designed to increase adoption rates among tourists ahead of a mainstream rollout.
The new upgrades appear to be targeted at Hong Kong residents visiting China, as reported by local news outlet People’s Daily. The feature will allow Hong Kong tourists to top-up their digital yuan wallets via the Faster Payment System (FPS), a 24/7 service supporting payment in both Hong Kong dollar and the yuan.
The integration was tested by Hong Kong’s delegation at the Asian Games hosted by China, with the team expressing satisfactory results. Pundits have hailed the update as a leap by the People’s Bank of China (PBoC) toward achieving cross-border functionalities for the digital yuan.
The upgrade will foster faster and cheaper transactions while giving users greater control over their accounts, according to experts.
The PBoC seized the opportunity presented by the Asian Games to test its ‘recharge first, use later’ functionality, with participants leaving glowing reviews about the feature. The central bank also experimented with the use of QR codes to make payments via the digital yuan app, a feature that has been in development since 2022.
On the eve of the Asian Games, the PBoC rolled out a feature to allow foreigners to fund their digital yuan wallets via Visa and Mastercard. The release of a slew of upgrades around a major sporting event forms part of the PBoC’s playbook as it relied on the same method during the Beijing Winter Olympics.
While its attempts at garnering foreign users have begun earning early rewards, the PBoC is keen to consolidate its gains by expanding the limits of retail usage to several sectors without size limits.
“First thing to be upgraded is the payment tool used in retail scenarios, that is, digital renminbi is used as the payment tool in all retail scenarios,” said Changchun Mu, director of the Digital Currency Research Institute. “Some people now believe that the retail scene means that the digital renminbi can only be used for small payments and cannot be used for large payments.”
Hong Kong and China’s CBDC collaboration
The PBoC has made public its intention to promote the digital yuan usage in Hong Kong but it has not been smooth sailing for the central bank. In March, the first attempt to introduce the CBDC to Hong Kong recorded “dismal adoption” as less than 1,000 residents interacted with the offering despite multiple incentives.
A second attempt to foster cross-border functionalities faltered following complaints of low numbers of merchants accepting the digital yuan, and a lack of technical expertise by cashiers interacting with consumers.
Adoption began to gather steam after the Bank of China (Hong Kong) announced a new feature that will allow Chinese tourists visiting Hong Kong to pay for goods and services using the digital yuan.
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.
Watch: Finding ways to use CBDC outside of digital currencies
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
