The Chinese central bank has introduced a new offline SIM card-based solution for their digital yuan “hard” wallet. This innovation allows users to make payments with the central bank digital currency (CBDC) even when their phones are powered down. This development is significant as it opens up the use of the digital yuan to citizens who own 2G phones.
Previously, a similar solution was unveiled for smartphone users, which relied on near field communication (NFC) technology. However, this new offline SIM card-based solution utilizes hardware embedded on SIM cards, expanding the accessibility of the digital yuan to a wider range of mobile devices.
The People’s Bank of China (PBoC) has updated its app to enable Android phone users to use their SIM cards as “hard” (offline) CBDC wallets. Alongside this update, PBoC’s mobile and banking partners, including China Mobile, China Telecom, China Unicom, the Industrial and Commercial Bank of China, and the Bank of China, have also launched SIM card-based “hard wallet products.”
The introduction of this new function is expected to greatly expand the scope of the digital yuan’s use and its network-free payment capabilities. To make use of this innovation, citizens will need to obtain a “super SIM card” from their carriers and launch the digital yuan app on their phones. Within the app, users will find an option to open a SIM card hard wallet, enabling them to make touch payments to merchants even when their devices are powered down or lack a network connection.
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It’s worth mentioning that, currently, this innovation is only available to Android phone users with NFC functionality. No announcement has been made regarding iOS users or 2G phone owners. However, SIM-based wallets are likely to be more useful for 2G phone users or those with smartphones lacking NFC capabilities. Although the PBoC has not revealed its ultimate plan, it would make logical sense for future updates to cater to the needs of the 20% of Chinese mobile users who rely on 2G devices.
This development is part of China’s ongoing efforts to promote the adoption and use of the digital yuan. In a recent pilot project, the city of Qingdao demonstrated the use of electricity- and network-free CBDC payments on its metro system. These initiatives showcase China’s determination to establish the digital yuan as a widely accepted and accessible form of currency.
With the introduction of the offline SIM card-based solution, the digital yuan’s reach and usability are expanding. This innovation allows more individuals to participate in the digital economy and make secure and efficient transactions using their existing mobile devices. As the Chinese central bank continues to refine and expand the functionalities of the digital yuan, it will likely bring further advancements that enhance its adoption and make a significant impact on the country’s financial landscape.
