Today JCB, the Japanese card payment network, announced a central bank digital currency (CBDC) proof of concept, JCBDC, with IDEMIA and Malaysia fintech Soft Space. The aim is to demonstrate that CBDC can be used with existing payment cards and payment infrastructure. Tokyo merchants will test the solution during the first three months of 2023.
JCB also announced a second project for machine-to-machine (M2M) offline payments, which could potentially be used for CBDC.
For the first project, Soft Space has an application, ‘Tap on Mobile’, that enables mobile phones to act as point-of-sale terminals with debit and credit cards. Hence CBDC payments using payment cards will be routed through the conventional card network and eventually to JCB’s blockchain-based CBDC network.
While most CBDC solutions focus on mobile wallets, not everyone has a smartphone and sometimes cards might be more appealing.
IDEMIA, a partner for the project, was recently one of the winners of the G20 TechSprint for CBDC for an offline wallet solution.
The second project for machine-to-machine (M2M) offline payments is an extension of an existing initiative with enterprise blockchain startup Keychain. Together they’ve been working on a layered payment solution with a network sitting between the cloud and physical devices.
This intermediate layer provides scalability with high volumes of micropayments and makes it less centralized, with blockchain used to enable a secure log of payment history. Devices such as routers or servers close to the user perform the authentication function even if the central payment platform is offline.
Now that this project is getting closer to production, Toppan Forms is getting involved in enabling the project to incorporate an authentication function into chip-based IC payment cards and payment terminals, two areas in which Toppan specializes. Keychain provides the authentication or digital identity using blockchain.
JCB has been working on blockchain solutions for years. In 2019 it partnered with blockchain B2B payment firm Paystand. More recently it has been exploring blockchain interoperability with Datachain for digital currency exchange.