Digital Yuan Trial in Hong Kong Expands: Faster Top-Ups via Faster Payment System

Since the expansion of the digital yuan pilot in Hong Kong, several banks, including Hang Seng Bank and Bank of Communications Hong Kong, announced on May 17 that they are offering top-up services for digital yuan wallets through the Faster Payment System (FPS). FPS: Hong Kong's Fast Payment System FPS is a fast payment system launched by the Hong Kong Monetary Authority (HKMA)

Since the expansion of the digital yuan pilot in Hong Kong, several banks, including Hang Seng Bank and Bank of Communications Hong Kong, announced on May 17 that they are offering top-up services for digital yuan wallets through the Faster Payment System (FPS).

FPS: Hong Kong's Fast Payment System

FPS is a fast payment system launched by the Hong Kong Monetary Authority (HKMA). It allows customers to make payments across banks or e-wallets by simply entering the recipient's mobile phone number or email address. The recipient receives the funds instantly.

Deepening Financial Cooperation between Hong Kong and Mainland China

On January 24, the People's Bank of China (PBOC) and the HKMA jointly announced the launch of six financial initiatives under the "Three Links and Three Conveniences" framework. These initiatives aim to promote high-level opening-up of the mainland financial industry, deepen financial cooperation between Hong Kong and the mainland, and consolidate and enhance Hong Kong's status as an international financial center. Deepening the digital yuan cross-border payment pilot cooperation is one of the key initiatives.

Industry experts believe that Hong Kong residents opening and using digital yuan wallets (DC/EP wallets) and topping up their wallets through FPS signifies the interconnectivity between FPS and the PBOC's Digital Currency Research Institute's (DCRI) digital yuan central bank digital currency (CBDC) system. This marks the first-ever connection between a fast payment system and a central bank digital currency system, providing an innovative use case for the interoperability emphasized in the G20 Cross-Border Payments Blueprint.

Multiple Banks Offer FPS Top-Up Services

Multiple banks are already offering FPS top-up services for digital yuan wallets, with some banks offering promotional incentives to encourage early adoption.

Hang Seng Bank informed CF that its customers can now top up their digital yuan wallets. Hang Seng customers simply need to select "Top Up" in their wallet, enter the amount, and select Hang Seng Bank. The system will then automatically redirect them to the Hang Seng Mobile App, where they can log in and choose to deduct funds from theirsavings account or instantly convert HKD to RMB for the top-up.

Bank of Communications (Hong Kong) announced that from May 17 to August 15, its mobile banking customers who successfully top up their Bank of Communications digital yuan wallets with HKD 100 or more via FPS will be eligible for a HKD 100 digital yuan reward. The first 3,328 customers will receive this reward.

To date, 17 banks in Hong Kong offer FPS top-up services. Six institutions allow top-ups through RMB bank accounts, while 11 institutions support instant HKD-to-RMB conversions for top-ups through both RMB and HKD bank accounts.

Cross-Border Payment Cooperation to Deepen Further

Hong Kong is the first region outside mainland China where local residents can open DC/EP wallets. In this regard, HKMA Chief Executive Eddie Yue said that the HKMA will continue to collaborate closely with the PBOC to gradually expand the scope of digital yuan applications, enhance the functions of DC/EP wallets available to Hong Kong residents, and encourage more retail merchants to accept digital yuan, facilitating cross-border retail payments between the two regions.

The digital yuan is expected to expand its pilot scope in Hong Kong, enabling more Hong Kong residents to conveniently open and use digital yuan wallets and top them up through FPS. This will facilitate payments in mainland China for Hong Kong residents living or spending there. Mainland tourists can also use digital yuan when visiting Hong Kong, providing payment support for the "one-hour living circle" in the Guangdong-Hong Kong-Macao Greater Bay Area.

Going forward, the HKMA and PBOC will continue to expand and enhance the outcomes of the digital yuan cross-border pilot, supporting the participation of more institutions from both regions in the pilot program, enriching the functions of DC/EP wallets available to Hong Kong residents, and encouraging more retail merchants in both regions to accept digital yuan. The two regions also envision imaginative applications for businesses and cross-border trade settlement.

Yi Gang, Deputy Director of the Digital Currency Research Institute of the People's Bank of China, pointed out that through field research with enterprises, the institute found that many enterprises face issues such as limited cross-border payment channels, high costs, and low efficiency in international trade. The joint research conducted by the institute and the HKMA on the integration of digital yuan systems with FPS at the infrastructure level can further enhance the efficiency of straight-through processing for cross-border business and reduce transaction costs. Therefore, within the framework of bilateral cooperation, the two parties can explore the cross-border payment applications of digital yuan in commodity trade such as oil and gas, as well as in services trade.