Digital Yuan Hard Wallets: Definition and Usage
Digital Yuan hard wallets are a form of wallet that leverages secure chip technology and relies on specific hardware carriers such as IC cards, mobile terminals, wearable devices, and IoT devices to provide Digital Yuan services to users. They store the Digital Yuan in physical hardware, aiming to offer a wider range of payment scenarios and a more convenient user experience.
Activating and Binding Hard Wallets
- Soft Wallet Prerequisite: Users must first download the "Digital Yuan (Pilot Version)" app from their mobile app store and successfully activate a soft wallet.
- Mobile PAY Hard Wallet: Within the app, navigate to "My > Hard Wallets," tap the "+" icon in the top right corner, select "Mobile PAY" or other methods, and follow the prompts to add the hard wallet.
- Physical Card Binding: For physical hard wallets like IC cards, users can enable NFC in the app, go to the "Services" interface, tap "Tap to Connect," and place the hard wallet near the upper back of their phone to complete the binding.
Payment Methods
- "Tap-and-Go" Payment: This is the primary payment method for hard wallets. Users simply tap their hard wallet near a Digital Yuan-enabled POS machine or trusted mobile terminal to complete a payment. This method does not require network support, making it particularly suitable for environments with no or weak internet connectivity, ensuring smooth transactions.
- "Scan-to-Pay" Function: Some hard wallets, such as visual hard wallets, have an e-ink screen that displays a dynamic payment QR code. Merchants can simply scan this QR code with their mobile phone to collect payment, adding flexibility to the payment process.
Features of Visual Hard Wallets
Visual hard wallets were first launched in Shenzhen in November 2024. Their built-in e-ink screen displays real-time balances and dynamic payment codes, significantly enhancing user-friendliness for groups such as the elderly, students, and foreign visitors to China. They support various top-up channels, including RMB and foreign currency cash, Visa, and Mastercard foreign cards, making them convenient for users from different backgrounds.
Convenient Option for Foreign Visitors to China
Digital Yuan hard wallets offer a new payment solution for short-term foreign visitors to China who do not have a Chinese mobile number or bank account and are accustomed to using physical cards for payment. For example, Bank of Communications launched the "Qingdao Pass" cultural tourism themed card, and Bank of China introduced the "MiFang Card." These cards integrate payment, communication, and transportation functions, allowing foreign visitors to apply with just their passport, without needing to bind a bank card or rely on the internet. Furthermore, upon departure, tax refunds can be directly converted into an equivalent Digital Yuan hard wallet balance for secondary consumption within China.
Core Functions of the Digital Yuan
As the digital form of legal tender issued by the People's Bank of China, the Digital Yuan's role extends far beyond a mere payment tool, playing multiple strategic roles at a macro level.
Legal Tender Attributes and Payment Convenience
The Digital Yuan is equivalent to physical RMB and has legal tender status. It is easier to carry and store, less prone to damage, loss, or theft, effectively avoids the risk of counterfeit money, and supports fast transactions without the need for change. Its "controllable anonymity" design protects user privacy while also supporting "dual offline" payments, meaning transactions can be completed even without network access, greatly enhancing payment convenience and security.
Promoting Digital Economy and Financial Inclusion
The promotion of the Digital Yuan helps improve the efficiency of currency issuance and the central bank's payment system, thereby driving the rapid development of the digital economy. It charges no fees to the issuing layer or the public, allowing people in remote areas to easily open Digital Yuan wallets even without traditional bank accounts, effectively expanding the coverage and accessibility of financial inclusion services.
Optimizing Financial Management and Macroeconomic Regulation
The Digital Yuan helps reduce the central bank's management costs for the RMB. At the same time, it assists the government in combating illegal activities such as money laundering and tax evasion, enabling real-time monitoring of capital flows and stocks, thereby enhancing financial stability and improving the effectiveness of monetary and fiscal policies.
Enhancing RMB's International Influence
With its low cost and high efficiency, the Digital Yuan is expected to reshape the RMB settlement system and promote the formation of a new international internet economic order. This will help increase the RMB's weight in Special Drawing Rights (SDR), strengthen its function as an international reserve currency, and advance the high-quality development of the "Belt and Road" initiative, accelerating the internationalization of the RMB. For example, the Cross-Border E-CNY Transaction Settlement (CBETS) platform has achieved interoperability with Hong Kong's Faster Payment System (FPS) and Laos' National Payment Network (LAPNet). Svmuu will continue to report on related developments.
Complement and Check
The Digital Yuan provides an important complement and backup to China's existing traditional electronic payment system. It is also one of the strategic measures taken by the Chinese government to break the duopoly of Alipay and WeChat Pay and protect the RMB from the potential impact of private cryptocurrencies.
Latest Developments and Future Outlook for the Digital Yuan
Since its launch, the Digital Yuan project has steadily progressed and achieved significant advancements in several areas.
Pilot Scope and Transaction Data
The Digital Yuan pilot program has expanded to 26 regions across 17 provinces (municipalities) in China. As of the end of November 2025, the Digital Yuan had cumulatively processed 3.48 billion transactions, with a total transaction value reaching 16.7 trillion RMB. The number of individual wallets opened through the Digital Yuan app reached 230 million, and institutional wallets numbered 18.84 million.
Version 2.0 and Interest Accrual Mechanism
Starting January 1, 2026, the Digital Yuan officially entered Version 2.0. A significant change is that balances in real-name wallets (Categories I, II, and III) will begin to accrue interest at the posted rates for bank demand deposits, marking the Digital Yuan's transition from "digital cash" to the era of "digital deposit currency." Category IV non-real-name wallets will not accrue interest.
Continuous Expansion of Application Scenarios
The Digital Yuan's application scenarios have widely covered wholesale and retail, catering and entertainment, education and healthcare, social governance, public services, rural revitalization, and green finance, among other fields. In the future, its application scope is expected to gradually expand from retail payments to wholesale business, and from a single payment function to broader financial services including deposits, loans, remittances, and investments.
Positive Progress in Cross-Border Payments
In cross-border payments, the Digital Yuan has also made positive progress. As of the end of September 2026, after the initial 26 financial institutions signed up to connect to the Cross-Border E-CNY Transaction Settlement (CBETS) platform, an additional 39 domestic and international financial institutions applied to connect. Currently, the international version of CBETS supports wallet registration using mobile numbers from over 210 countries and regions, further broadening the international application prospects of the Digital Yuan.
Key Stakeholders
The Digital Yuan ecosystem involves several key participants who jointly drive its development and application:
- Issuer: The People's Bank of China (PBOC) is the sole issuer of the Digital Yuan.
- Operating Institutions: These include designated commercial banks such as Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of China, Bank of Communications, and Postal Savings Bank of China, responsible for Digital Yuan exchange and circulation services.
- Technical Support: The People's Bank of China's Digital Currency Research Institute (established in 2016), as a financial infrastructure unit, provides technical support for the research, development, and promotion of the Digital Yuan.
- Users: This includes individual users, corporate entities (legal and non-legal entities), and foreign visitors to China.
- Partners: These include China UnionPay Merchant Services (piloting "tap-and-go" hard wallet collection services in Shenzhen), the Hong Kong Monetary Authority (Hong Kong Faster Payment System), and the Central Bank of Laos (Laos National Payment Network), jointly promoting the implementation of the Digital Yuan in different scenarios and regions.
