ANZ is partnering with two universities to trial offline CBDC payments via smart cards that can be loaded with funds and used like physical cash.
The project is one of fourteen pilot trials being conducted by the Reserve Bank of Australia to investigate potential use cases for a central bank digital currency.
The ANZ pilot aims to show that using blockchain technology and NFC-enabled smart cards, CBDC could enable users to make instant payments on a peer-to-peer basis, even in an offline environment that is not connected to existing banking infrastructure.
The pilot will be conducted on campus at Southern Cross University and RMIT University. As part of the pilot, NFC-enabled smart cards pre-loaded with CBDC funds will be given to participating students.
The aim is to demonstrate how an organisation like a university can step in and provide immediate financial support through the disbursement of CBDC in emergency situations, such as where students are unable to access funds online or traditional banking services.
The pilot will involve several steps. First, the universities will operate a secure smartphone app to view their CBDC balance. Using NFC functionality, specific amounts of CBDC will be loaded onto the smart cards.
Second, the smart cards will be given to participating students, who will use them to make purchases at on-campus merchants, such as cafes, gyms and book shops.
Third, merchants will have a secure smartphone app to accept the students’ card payments at point of sale, where CBDC payments will be transferred in an offline scenario. These consumer-to-merchant payments function as cash sales.
Finally, merchants will use their app to view the CBDC they have received and can select to redeem their CBDC balance into fiat currency, which will be transferred to their bank accounts.
Researchers at the universities plan to undertake scalability assessments for more sensitive use cases such as payments to communities affected by emergencies or government-sponsored payment schemes for communities in need.
This is one of four ANZ-backed tests in the RBA pilot. Another project will test the efficiency and effectiveness of employers using CBDC for superannuation contributions as a viable alternative to traditional payment methods, while a third will look at the issuance of CBDC in line with KYC processes.
A fourth project, conducted in collaboration with CBA, will demonstrate the tokenisation of nature-based assets, issuance of commercial bank stablecoins, and the use of smart contracts to achieve atomic settlement via a public permissionless blockchain. This pilot aims to demonstrate the use of CBDC as a risk-free settlement asset by supporting the issuance of commercial bank AUD-denominated stablecoins.
To learn more about payments innovation, register for NextGen Nordics to take place on 25 April 2023.