Digital RMB: Patents Enable 'Trailblazers' to Taste Perks of E-Currency Payment
Updated: 3 10,2021 Source:China IP News

On the evening of February 10, 2021, Ms. Li who stayed put in Beijing during the Spring Festival was overjoyed when receiving the winning message. Two days ago, she signed up through the JD APP for the lottery of digital RMB red envelopes, a featured event of Beijing's "Digital Wangfujing" Snow and Ice Shopping Festival. It was such a move that made her the lucky one.

During this year's Spring Festival, the People's Bank of China (PBOC), in collaboration with local governments, dished out digital RMB red envelopes in pilot cities including Shenzhen and Suzhou, as well as some areas in Beijing where the Winter Olympics will be held, to encourage citizens to celebrate the Festival by not leaving town. Eventually, 150,000 Suzhou citizens and 50,000 Beijing citizens were luckily chosen. Each of them has won a red envelope of 200 digital RMB to celebrate the Festival.

Since 2014, PBOC has been working on the official digital currency technology. At the end of 2017, with the approval of the State Council, PBOC organized some powerful commercial banks and relevant institutions to jointly develop the digital RMB (DC/EP) system. As of date, the relevant research is advancing steadily with visible innovative results. So, what is the digital RMB? How to use this currency? What are the patents behind it?

The digital RMB refers to the digitalized official/legal currency issued by the PBOC, which shares the same legal status and functions with those physical notes. The said 200-yuan-red-envelope lottery in Shenzhen, Suzhou and Beijing allows spending at both designated offline shops and JD APP's online shopping mall.

Datas indicate just in Beijing the activity drew over 2.52 million citizens, 80,000 of which registered within the hour after the launch. Six banks were appointed as the operators of the digital RMB red envelopes, including the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the Construction Bank of China, the Bank of Communications and the Postal Savings Bank of China.

"When purchasing at brick-and-mortar shops, consumers can enjoy safe and convenient payment by opening the digital RMB APP and using their smart phones to 'touch' the shop's POS machine after selecting products," a staff of the Winter Olympics merchandises sales area of Wangfujing Gongmei Emporium introduced to our reporter. Users can easily and quickly top up their subway cards or purchase goods by scanning the QR code or being scanned using the digital RMB APP.

At the vending machine sales area, a staff was purchasing a cup of coffee through a visual payment card. Shopping with visual payment cards looks really cool since no Internet connection is required. In fact, this high-tech experience is backed up by a patented technology. Xie Chen and He Yisi, patent analysts of PatSnap, found that the PBOC's Institute of Digital Money, has filed a patent application titled "a method and system for digital currency payment by using visible digital currency chip cards" (No.CN107230068A) with a focus on visible card's ink screen. This innovative technology has disclosed a method and system of using a visible card to pay in digital currency, supporting payment without Internet connection, which consequently expands payment scenarios.

After years of research and development, how is the innovation and patent portfolio planning of China's digital RMB? What makes the PBOC's Institute of Digital Money (the main research and development institution of the digital RMB) score high? Through patent search, Xie found that as of February 20, 2021, the Institute had altogether submitted 95 patent applications, 39 of which had been granted.

Digging into those patent applications, we may see most of them were filed in 2016 (22) and 2017 (48). Technical-field-wise, the applications concentrate on payment architecture, scheme or agreement, and the applications of finance, insurance, tax strategy, corporate or income tax processing.

"Never seek a blockbuster success, but advance one step after antother," Xie said. The relevant data shows that the Institute heeds innovation and patent protection and designed its patent portfolio three or four years before maket launch. Patents always go before products, which is an applaudable move. Relevant data also indicates that the Institute worked closely with other financial institutions and tech companies to develop new technologies, which in turn makes the market bigger and more profitable for everybody.

"According to the global ranking of related technology applicants, MasterCard submitted the most applications (358), followed by Wal-Mart (265) and Enchain Holdings (204). Notably, Alibaba ranked fifth (152)," He said. This shows that China still needs to make more efforts on research and development, and encourage continuous innovation of digital currency technology by multiple measures.

Zhou Xiaochuan, former governor of PBOC, said in a separate interview that from the perspective of safety and costs, physical notes, as the currency of the previous generation, inevitably shall be replaced for its low tech barriers. Especially with the advent of the Internet and the massive changes in global payment methods, establishing a digital currency's issuance and circulation system is necessary for construction of financial infrastructure and upgrade of economic quality and efficiency.

R&D of the digital RMB is advancing according to plan as we speak while tests in closed pockets in  Shenzhen, Suzhou, Xiong'an, Chengdu and the Winter Olympics locations are being run. The next group of pilot cities including Changsha are approved and ready. It is believed that under the trend of technological innovation and application scenario expansion, mass-market application of the digital RMB is around the corner. In the meantime, China still needs to strengthen innovation, enhance the protection of core intellectual property rights and safeguard national currency security.