The BOCHK issued simulated Hong Kong dollars to employees of the Bank, which they could spend at ten participating merchants covering a range of different sectors (e.g. health, fitness, education). When employees buy a prepaid service contract from a participating merchant, the customer’s prepaid funds are converted into digital Hong Kong dollars under their own name. Once the merchant provides the good or service, the smart contract executes automatically and the merchant receives the payment immediately.
A key innovation of this trial was to layer the smart contract functionality onto the CBDC. Additionally, the bank integrated the eHKD with existing point of sale functionality, BoC Pay and BoC Bill “Payment Express”, and did not require merchants to install any new software. This significantly reduces the burden on merchants and enhances the overall convenience of the payment system.
This trial comes less than a month after HSBC started another HKMA trial, successfully demonstrating the use of distributed ledger technology (DLT) for programmable instant settlement of eHKD for retail payments.