(Yicai Global) June 28 -- Shenzhen became the first Chinese city to allow the use of the digital Chinese yuan in the prepaid business model, where customers pay a lump sum upfront to get discounts or better services from firms, when it rolled out the service earlier this week, the Shanghai Securities News reported.

The digital yuan helps to ensure the safety of consumers’ prepaid funds as it is traceable and cannot be tampered with, the report said, citing an official from the Shenzhen branch of the People’s Bank of China.

The prepaid model is commonly used in sectors such as education, sports and beauty. However, there is a risk that companies may use the deposits for other purposes or disappear with the money.

Shenzhen started to test the e-yuan in education and training academies in May last year, and then expanded it to other sectors such as tourism, catering and fitness, where the prepaid model is common.

The e-yuan can be introduced in more scenarios that require prepayments, such as real estate, house rentals and shared bicycles, in future, Dong Ximiao, chief researcher at Merchants Union Consumer Finance Company, told Yicai Global.

Editor: Kim Taylor