Cryptocurrency-friendly bank DBS is cooperating with mainland China on the development of a new payment solution for the digital yuan, also known as e-CNY.
DBS Bank China officially announced on July 5 the launch of the e-CNY merchant solution, allowing mainland businesses to receive payments in the central bank digital currency (CBDC).
The new service will allow corporate clients of DBS Bank China to collect payments from their customers in e-CNY and conduct automated settlement of e-CNY directly into their CNY bank deposit account.
DBS’ solution is designed to enable a number of benefits, allowing businesses to collect CBDC “without having to go through manual settlement processes,” the announcement notes. The tool also features capabilities allowing merchants to receive payments in underserved regions with limited internet connectivity.
Additionally, the solution provides reconciliation through consolidated merchant reports with itemized e-CNY transactions available via DBS’ digital platform for business banking.
According to DBS Bank China CEO Ginger Cheng, the company has completed the first e-CNY transaction involving a catering company in Shenzhen. He said:
“By seamlessly integrating a CBDC collection and settlement method into our clients’ existing payment systems, this will help position their business for a digital future where consumers in China use e-CNY for their daily activities.”
He added that the development showcases the firm’s commitment to improving user experience while “actively supporting the development of China’s financial market innovation.”
Lim Soon Chong, DBS Bank head of global transaction services, noted that the new CBDC service marks another milestone in the firm’s efforts of enabling instant and frictionless 24/7 payments. “We look forward to building on this launch to explore new digital payment solutions, such as cross-border CBDC payments,” the exec added.
Since launching the CBDC in 2019, China has significantly progressed in promoting and expanding the digital yuan. According to the country’s central bank, there were 13.6 billion e-CNY in circulation, or about $2 billion by the end of 2022. The CBDC is currently accepted across 26 cities and 17 provinces in China, with adoption expected to scale further as the program gradually expands to more regions.
While supporting centralized finance initiatives like e-CNY, DBS Bank is known for its pro-crypto stance. In 2020, the Singaporean megabank launched cryptocurrency trading and custody services for institutional clients. The firm was reportedly among the few companies in the world that reaped benefits from massive collapses in the crypto industry, seeing a 80% spike in Bitcoin (BTC) trading volumes in 2022.
Apart from assisting China in expanding its CBDC ecosystem, DBS also participated in various government-related blockchain initiatives in Singapore, including Project Orchid, Project Guardian and Project Ubin.