(Yicai Global) Sept. 8 -- Intended to prevent unscrupulous merchants from embezzling prepayments made by buyers, a new digital yuan management tool has been unveiled.
Yuan Manager was released at an industry forum today by the digital currency research institute under the People’s Bank of China. It will be tried out first among Beijing’s education and training institutions.
Prepayments are normally deposited in accounts that merchants specifically open for such fees, so it is possible for them to make off with the money, according to Di Gang, the institute’s deputy head.
The new tool creates a digital wallet with a smart contract for every prepaid consumer, and due to the terms of the contract, merchants cannot arbitrarily transfer the funds until they complete their services, Di noted.
Yuan Manager can guarantee that money paid upfront is safe in the event case of unforeseen circumstances such as a vendor’s bankruptcy and liquidation during a contract period.
Merchants can apply to execute the smart contract when they complete services that consumers pay for, and the contract will transfer the prepaid funds to the merchants after verifying that all conditions have been met. This technically rules out the possibility of embezzling the prepayments via artificial operations, Di added.
Digital yuan use is becoming more popular. As of May 31, pilot areas in 15 provinces and cities in China completed about 264 million e-yuan transactions, amounting to about CNY83 billion (USD12 billion), according to official data.
Some 4.6 million retail stores support e-yuan payments. And the numbers have been rising quickly. By the end of June 2021, some 70.8 million digital yuan transactions had been made, with a total tally of about CNY34.5 billion, the latest government data showed.
Beijing Houhai Education and Training School will be one of the first to use Yuan Manager. Huang Yafeng, director of the school office, told Yicai Global, that the product solves the problem of trust between parents and learning providers, so they can make advance tuition payments free of concern.
Besides its use in the consumer service sector, this digital wallet with smart contract system can also be used in other more complex applications, Di said. For example, in payments to government bodies, and with bank loans and scientific research funds.
According to rules agreed by both sides, the system should act as an automatic monitor that makes payment only after the recipient satisfies all of the pre-set requirements, Di said.
Editors: Tang Shihua, Peter Thomas