(Yicai) Sept. 13 -- China’s digital currency has drawn much interest at the China International Fair for Trade in Services, with a number of financial institutions and fintech companies showcasing the e-yuan’s latest applications in public, cross-border, and corporate transactions.

Bank of Communications installed a device that exchanges digital yuan for coins and small bills at its booth at the CIFTIS in Beijing, which kicked off yesterday. In the future, this machine will be deployed in places with high footfall, such as banks, communities, and hotels.

During the five-day event, an indoor digital currency display zone and an outdoor interactive area will enable visitors to the CIFTIS to experience for themselves the progress that is being made with the digital yuan.

Development of the e-yuan, China’s central bank digital currency, began in 2014. Trials have been underway since 2020, involving cities such as Beijing, Shanghai, and Shenzhen, the country’s big four banks, and various businesses, including Alibaba, Huawei, Tencent, and McDonald’s. It had been used for CNY7 trillion (USD962.8 billion) of transactions in China as of June 30.

At the CIFTIS, Industrial and Commercial Bank of China is showcasing a function that allows people to use their digital wallets to enter subway stations, a service that is expected to be available soon on the Beijing Metro.

ICBC has also put on display China's first e-yuan prepaid card with smart contract capabilities, co-developed with Chinese lifestyle services provider Meituan. It ensures full regulatory oversight of prepaid funds and enhanced customer protection.

Industrial Bank has introduced the first digital yuan wallet for residents of Hong Kong, Macao, and Taiwan, offering services including currency exchange, payroll, bond issuance, and bill payments.

Challenges remain, however. Its adoption faces hurdles such as a lack of incentives for commercial banks to promote the e-yuan and difficulties in changing consumer and business payment habits.

To address these issues China should prioritize the e-yuan’s use in public expenditure and services, thereby setting an example for businesses and individuals, Dong Zhiyong, dean of Peking University's school of economics, said at the CIFTIS. He also emphasized the need for public education to build trust in this new payment method.

Dong further proposed enhancing incentives for payment providers by setting reasonable service fees, offering value-added services, and optimizing the payment process to make digital yuan transactions faster and simpler.

Moreover, he called for integrating the e-yuan payment system with various commercial scenarios, creating a broad application ecosystem, as well as establishing public service platforms to provide technical support and market promotion services for digital yuan enterprises.

Editor: Futura Costaglione