Hong Kong residents can now open e-CNY wallets for payments in the city and on the mainland through four Chinese banks in the city and add value via the widely used Faster Payment System (FPS), in a citywide roll-out of a digital yuan pilot that aims to make cross-border retail payments more convenient. The Hong Kong Monetary Authority (HKMA) announced that residents can use their Hong Kong mobile phone numbers to set up e-CNY personal wallets and top up the wallets via FPS through 17 retail banks in Hong Kong – without having to open a mainland China bank account. The move aims to expand the scope and scale of a cross-boundary pilot of the Chinese central bank digital currency that the HKMA has been conducting, along with the People’s Bank of China (PBOC), since December 2020. Previously, the pilot was limited to certain banks’ staff members and merchants.
“We are delighted that Hong Kong, being the first place to conduct a cross-boundary e-CNY pilot, has also become the first place outside mainland China that enables its residents to set up e-CNY wallets locally,” said Eddie Yue, CEO of the HKMA. “We will continue to work closely with the PBOC to gradually expand the applications of e-CNY, enrich the functionality of the e-CNY wallet available to Hong Kong residents and step up efforts in promoting the acceptance of e-CNY by more retail merchants.” The expansion of the pilot program aims to provide an “additional safe, convenient and innovative” means of retail payment for Hongkongers spending in mainland China and mainland users coming to Hong Kong, Howard Lee, the HKMA’s Deputy CEO, said during a press briefing. “The e-CNY is the digital representation of yuan bank notes,” he said. “It’s different from the e-wallet operators in a sense that the e-CNY in the wallet is backed by the People’s Bank of China (PBOC), not by individual organizations.” The wallet is not intended to replace any means of payment already available in the market, Lee added. “One more option is always better than one fewer option,” he said. “We believe that some people may find it convenient and easy to use.”
In the initial stage, Hong Kong residents can set up digital yuan wallets through Bank of China (BOC), Bank of Communications (BOCOM), China Construction Bank (CCB) and Industrial and Commercial Bank of China (ICBC). They may also link to a bank card to add value or make direct payments. Out of the 17 retail banks, 11 support top-ups from Hong Kong dollar accounts, which can be directly exchanged for yuan using the banks’ exchange rates. Six banks also support top-ups from yuan accounts. The wallet has limitations in outstanding value and transaction amounts because it is a “tier-4” e-CNY wallet, a type that does not require real-name authentication. The maximum balance is CNY10,000, while the payment limit per transaction is CNY2,000. Users can use the wallet to pay up to CNY5,000 daily and CNY50,000 annually.
China began piloting the e-CNY in 2019. It is now available in 26 cities and is accepted by at least 10 million merchants in mainland China. In Hong Kong, about 300 shops accept e-CNY. The HKMA said it will seek to upgrade the e-CNY wallet to higher tiers through real-name verification. Additionally, corporate use will be explored to facilitate cross-boundary trade settlement.
The four Chinese banks have rolled out different incentives to lure Hong Kong residents to sign up for their wallets. The banks may also seek to provide lower fees to attract merchants. “To promote more local merchants to accept e-CNY payments, Bank of China Hong Kong has cooperated with Mannings to gradually expand e-CNY payment services,” said Xing Guiwei, Deputy CEO of Bank of China (Hong Kong). The interoperability between the FPS and the PBOC’s e-CNY system is the world’s first linkage of a faster payment system with a central bank digital currency, according to the HKMA. The FPS had 13.6 million registered users at the end of last year, almost double Hong Kong’s population, as an individual may register multiple accounts at multiple banks, the South China Morning Post reports.
