People's Daily: Digital RMB brings better payment experience and can be used even without Internet

Source: People's Daily

Our reporter Ge Mengchao and Wu Qiuyu

In the past 2020, digital RMB has attracted much attention from the society. The "Proposal of the CPC Central Committee on Formulating the 14th Five-Year Plan for National Economic and Social Development and the Long-Term Goals for 2035" proposed to steadily promote the research and development of digital currency. Many people are curious: What is digital RMB? What is the payment experience? How will it affect our lives? Around these issues, the reporter recently interviewed consumers, merchants and relevant experts.

RMB in the “digital wallet”

The digital RMB payment experience is smooth, and payments can be made without an Internet connection

Digital RMB is getting closer. Since the second half of 2020, digital RMB has been tested on a large scale in Shenzhen, Suzhou and other places for the general public. During the pilot period, many consumers have already "tasted" this payment method.

On December 11, 2020, Ji Li, who works at a technology company in Suzhou, was having breakfast at home when his phone on the dining table vibrated several times. Glancing at the text message that popped up on the screen, he was extremely excited: "I won a digital RMB consumption red envelope!"

On that morning, many Suzhou citizens were as excited as Ji Li. During the 2020 "Double 12 Suzhou Shopping Festival", Suzhou City distributed 100,000 consumer red envelopes to eligible citizens in the form of "lottery draw", each containing 200 yuan in digital RMB. Winning citizens can receive the red envelopes after opening a digital wallet on their mobile phones according to the instructions. The digital RMB in the red envelopes can be spent at designated offline merchants in Suzhou, or online.

What is the digital RMB? "The digital RMB is a legal tender issued by the People's Bank of China with national credit endorsement. It is a digital form of RMB." Zhou Liping, deputy director of the Payment and Clearing Research Center of the Institute of Finance of the Chinese Academy of Social Sciences, said that the positioning of the digital RMB is to replace part of the cash. At present, cash mainly exists in physical forms such as banknotes and coins, while the digital RMB can be understood as cash in digital form. Banknotes and coins are placed in tangible wallets, which are inconvenient to carry and are mostly used for offline transactions; digital RMB is placed in intangible digital wallets and can be used for offline and online transactions.

How to spend the digital RMB in hand? Ji Li's idea is somewhat "bold": strive to be the first lucky person to use digital RMB to consume on online e-commerce platforms. "The event officially started at 8 pm on December 11, 2020, and I waited with my mobile phone at 7:30 pm." Ji Li said that he specially selected a battery online with a unit price of only 17 yuan. He cherishes this "hard-earned" digital RMB very much.

Open the shopping cart, pay immediately, choose digital RMB payment... As soon as the clock pointed to 8 o'clock, Ji Li got busy. "I paid while counting the time. The order was successfully placed at 8:00:32. The payment process is very similar to using mobile payment tools." He said that although he failed to become the "first person to try it" in the end, he was deeply impressed by the convenient and smooth payment experience of digital RMB. In the following period of time, Ji Li used digital RMB to eat beef brisket noodles at a snack bar and buy a notebook at a supermarket...

Unlike Ji Li's online experience, Suzhou citizen Li Yichen has long been looking forward to the "offline" payment function of the digital RMB. The so-called "offline" payment refers to the way in which users do not connect to the backend system when conducting transactions or transferring funds under no or weak network conditions, but verify the user's identity, confirm the transaction information and make payments in the digital wallet. In short, payments can be made without the Internet.

What is the experience of "offline" payment? At the Baifen Tea Beverage Shop on the basement floor of Fanhua Center in Xiangcheng District, Suzhou, Li Yichen and the owner first adjusted their mobile phones to flight mode. The owner entered the payment amount of 35 yuan in the digital wallet. Li Yichen opened the payment page in the digital wallet. The two mobile phones touched each other, and with a "whoosh", the digital RMB payment was completed in less than 2 seconds. "The whole payment process was very smooth, just like taking cash out of your own pocket and putting it into the owner's pocket. You no longer have to hold your mobile phone and look for the network everywhere." Li Yichen said.

Provide new payment options

In the future, digital RMB can be used to purchase goods and services that can be purchased with cash and mobile payment tools

Data shows that currently about 13% of Chinese residents mainly pay in cash; in the third quarter of 2020, the amount of mobile payments was 116.74 trillion yuan, an increase of more than 35% year-on-year. "People currently prefer cash, bank cards and mobile payments. In the future, digital RMB is expected to provide a new payment option." Dong Ximiao, chief researcher of CMB Financial, said.

"Cash is not a current or time deposit, and holding cash does not pay interest, so holding digital RMB naturally does not pay interest. In addition, similar to deposits and withdrawals, commercial banks will not charge any fees when individual users cash out or redeem digital RMB." Zhou Liping said.

Some people are worried that paper money will gradually disappear after the issuance of the digital RMB. Liu Xiaochun, deputy director of the Shanghai New Finance Research Institute, said that the public's payment habits vary, and some elderly people still have a strong demand for paper money. The People's Bank of China's issuance of the digital RMB is not to eliminate physical cash such as paper money. "As long as the people have the demand to use paper money, the People's Bank of China will not stop supplying paper money. In the foreseeable future, digital RMB and paper money will coexist for a long time." Mu Changchun, director of the Digital Currency Research Institute of the People's Bank of China, said.

What is the difference between digital RMB and commonly used mobile payment tools? In this regard, Mu Changchun said that digital RMB and mobile payment tools are not on the same dimension. Mobile payment tools are financial infrastructure and wallets, while digital RMB is the content in the wallet.

Yi Gang, governor of the People's Bank of China, said that at present, the digital economy is an increasingly important driving force for global economic growth. The research and development and application of legal digital currency will help to efficiently meet the public's demand for legal currency under the conditions of the digital economy, improve the convenience, security and anti-counterfeiting level of retail payments, and promote the accelerated development of my country's digital economy. "As mobile payments become increasingly important, the People's Bank of China needs to promote the payment system to keep pace with the times and launch the digital RMB as a pure public product through top-level design, which will become an important supplement to electronic payments." Liu Xiaochun said.

"Currently, when users use mobile payment tools, they are essentially making payments based on bank accounts. In the future, digital RMB will give users new choices in addition to cash, bank cards and mobile payments," said Dong Ximiao.

What can digital RMB be used to buy in the future? It is understood that during the pilot period alone, more than 10,000 consumer-end merchants in Suzhou can use digital RMB consumption red envelopes, covering shopping malls and supermarkets, daily retail, catering consumption, life services and other categories. The Digital Currency Research Institute of the People's Bank of China has recently reached strategic cooperation with JD Digits, Didi Chuxing and other companies. Digital RMB is expected to have more online consumption scenarios in the future.

"As long as the technical conditions are met, digital RMB can be used to purchase goods and services that can be purchased with cash and mobile payment tools in the future." Zhou Liping said, for example, it is winter now, and some ski enthusiasts like to go to the ski resort to show their skills. In the future, everyone can use digital RMB to buy ski resort tickets, pay for meals, etc. Recently, testers used digital RMB to buy subway tickets for the Beijing Daxing Airport Line, and experienced using the digital RMB wearable device wallet to "touch and pay" to enter the subway gate.

Bring a better payment experience

Even without a bank account, you can still enjoy financial services such as payment

How will the digital RMB affect our lives? Experts said that for ordinary people, the digital RMB will improve the user's payment experience to a certain extent, and will also help enhance the accessibility and inclusiveness of financial services.

——Digital RMB is expected to bring better payment experience to users.

"Although mobile payment tools can provide a good payment experience in most cases, there are still some problems," said Dong Ximiao. For example, some merchants will selectively accept mobile payment tools. Most of the QR codes of mainstream payment tools are posted on roadside fruit stalls. If consumers have not downloaded these tools, it is difficult to complete the payment. For another example, the use of mobile payment tools must rely on the Internet. In the case of no network or weak network, the payment experience will be greatly reduced.

"The usage of digital RMB and mobile payment tools are similar. Both support multiple payment methods such as QR code scanning payment and near-field payment." Dong Ximiao said, however, compared with current mobile payment tools, digital RMB supports "offline" payment functions. In airplane cabins, fast-moving high-speed trains, basements and other places without Internet or weak Internet, digital RMB can still be used normally, which will greatly improve the user's payment experience.

Judging from the pilot situation in Suzhou, the digital RMB is quite popular among merchants. Mr. He, the person in charge of the Huawei store in Wuyue Plaza, Xiangcheng District, Suzhou, told reporters that no matter whether consumers choose to pay with POS cards or mobile payment tools, merchants will be charged a certain fee. However, the digital RMB currently has zero fees for merchants and is credited in real time, which provides a lot of convenience for merchants and saves financial costs.

——Digital RMB will help enhance the accessibility and inclusiveness of financial services.

The digital RMB is based on a broad account system and supports loose coupling with bank accounts. Experts explain that this means that if users do not have a bank account, they can also use a unique identity identifier such as a mobile phone number to open a digital wallet and use digital RMB for payment.

"After the digital RMB is issued, people in some rural areas and remote mountainous areas can enjoy financial services such as payment through digital wallets even if they do not have bank accounts, which will help enhance the inclusiveness of financial services. For foreign tourists visiting China who do not have domestic bank accounts, they can make small payments by opening digital wallets," said Dong Ximiao.

Looking back at history, the People's Bank of China is one of the earliest institutions in the world to start research on legal digital currency. In 2014, the People's Bank of China began to conduct special research on issues such as the digital currency issuance framework and key technologies. At the end of 2017, with approval, the People's Bank of China organized some commercial banks and relevant institutions to jointly carry out the research and development of the digital RMB system. So, when can the general public really use the digital RMB?

Experts said that the digital RMB will first be tested in Shenzhen, Suzhou, Xiongan New Area in Hebei, Chengdu and the future Winter Olympics to test the theoretical reliability, system stability, functional availability, process convenience, scenario applicability and risk controllability. "The current pilot test of the digital RMB is just a routine work in the research and development process, and does not mean that the digital RMB will be officially launched. There is no timetable for its official launch." Zhou Liping said.

We look forward to the digital RMB truly entering people’s lives in the near future.