SHENZHEN has initiated a pilot program for digital renminbi (RMB) payment in prepaid consumption, aiming to safeguard consumers’ money by ensuring that funds paid in advance to operators cannot be misused

The initiative is the first of its kind in China, Shenzhen Special Zone Daily reported yesterday.

The implementation of digital RMB in prepaid expenses involves utilizing digital RMB smart contracts to manage the prepaid funds, according to the People’s Bank of China Shenzhen Central Sub-branch.

The prepaid funds are integrated into smart contracts, and the transaction’s successful completion relies on the agreement between consumers and operators on how to utilize the prepaid funds.

On the one hand, such transaction method incorporates contractual terms into smart contracts, preventing businesses from freely transferring funds prepaid by consumers; on the other hand, the prepaid funds remain locked until they are spent, ensuring the safety and security of the funds.

The utilization of digital RMB also enables the traceability of prepaid funds, guaranteeing that such funds cannot be misappropriated. It acts as a safeguard against scenarios where businesses abscond with the prepaid funds and provides consumers with evidence to recover any potential losses.

Digital RMB offers controllable anonymity, is tamper-proof, and can be programmed according to specific requirements, the Daily report said. By ensuring the security of funds, the application of digital currency in prepaid consumption reduces regulatory costs and enhances transaction efficiency.

(Zhang Yu)