Chinese smart card maker Chutian Dragon plans to manufacture a digital RMB card wallet using the fingerprint authentication technology of Norwegian IDEX Biometrics ASA. IDEX Biometrics announced this month.
Wallets using fingerprint technology could also increase privacy concerns when using the digital yuan.
Chutian Dragon’s efforts can be said to be one of the many efforts of Chinese tech companies that support the spread of the digital yuan. Alipay’s online payment service within the digital RMB mobile app is already in operation. Customers of the four largest commercial banks in China can use the digital RMB app to make food delivery and online shopping payments.
Digital RMB hardware
Beijing-based Chutian Dragon has been providing smart cards to Chinese government agencies and state-owned enterprises such as China Mobile and UnionPay for many years. Manufactures card-type wallets as hardware for digital yuan.
According to an IDEX statement, the partnership between Chutian Dragon and IDEX is based on a license and agreement when the two companies co-developed a payment card in 2019.
It is unknown whether the People’s Bank of China (PBOC) is involved in this collaboration. Chutian Dragon explained in April that it produced only a few card-type wallets for the digital yuan and could not mass-produce them yet.
At that time, the company said, “There are many uncertainties in businesses related to the digital yuan, such as research and development, production, and marketing.”
Stock prices of payment startups are rising
The stock price of Chutian Dragon, which was listed on the Shenzhen market in China in March 2021, has risen more than eight times since the listing date, and its market capitalization has reached 2.7 billion dollars (about 290 billion yen).
Chutian Dragon is not the only Chinese tech company to benefit from the Digital RMB initiative. The stock prices of many payment technology startups are also on the rise.
The People’s Bank of China has introduced “controllable anonymity” into the digital yuan. Users can trade anonymously with certain individuals or entities, but the People’s Bank of China can check transaction data if the transaction is determined to be suspicious or illegal. Also, holding a large amount of digital RMB can limit privacy.
Federal Reserve Board of Governors (FRB) Chairman Jerome Powell said the digital dollar should be better at protecting privacy than the digital yuan. But the Fed hasn’t revealed any technical details about protecting privacy in the digital dollar.
The centralized nature of the Central Bank Digital Currency (CBDC) is that it is not possible to replace crypto assets (virtual currencies) such as Bitcoin in terms of security and privacy, because CBDC collects personal data at the central bank. Some say that it may provide an efficient way to do this.