Standard Chartered Hong Kong and Giesecke+Devrient (G+D) have completed trials in the Hong Kong Monetary Authority Autority’s (HKMA) e-HKD pilot programme. Standard Chartered Hong Kong and Giesecke+Devrient announce key findings of its e-HKD pilot study on offline payment.

Results show that close to 80% of consumer participants see value in offline payment capability of hypothetical e-HKD. Offline capability and interoperability are two of the key factors to help future widespread adoption. The tests and experience sessions included a range of real-life scenarios involving public transport, restaurants, small retailers, and university campus, designed to explore the hypothetical e-HKD’s potential benefits and viability as an alternative to cash.

Digital currency transactions without internet connectivity The pilot, which was conducted between May to October 2023, demonstrated how a digital currency can operate without its fundamental element of being connected to the internet. During the pilot, a number of offline payment applications were tested with the support of G+D, the advisor for Standard Chartered Hong Kong’s 2018 banknote series, and applied its Central Bank Digital Currency (CBDC) technology focused on enabling a public means of payment. When combined with secure hardware, the technology provides the essential infrastructure and governance mechanisms to ensure trust and integrity within the CBDC ecosystem.

For offline transactions, digital tokens are stored within the secure element of a hardware wallet, including smart cards, mobile phones, or wearables. The payment mechanism fully supports offline capabilities, enabling transactions without internet connection, access to electricity, or dependence on a third party for settlement. It also enables real-time and secured consecutive dual offline payments.

The pilot also helped identify factors, including ‘Offline capability’ and ‘Interoperability’, that pilot participants found it critical to the success of the future e-HKD, if it is to be introduced. These include enabling transactions to be conducted smoothly and securely under all circumstances and available to all, while allowing consumers to use their preferred network and digital wallet for the hypothetical e-HKD transactions. Future focus points for e-HKD applications While the pilot results establish a strong reference for hypothetical e-HKD applications, potential areas for further research were identified, including: Develop a common standard that all platforms could leverage for building a common payment ecosystem; Explore other viable offline payment channels beyond physical smart cards and smartphones; Design of a cost-effective infrastructure for the bank to operationalise e-HKD which could improve the speed, efficiency, and implementation cost.

Officials from Standard Chartered said they are happy that close to 80% of consumer participants in the pilot see the hypothetical e-HKD could potentially address their current payment needs, while merchants also found the offline payment solution user-friendly and a complement to the existing digital payment methods. The insights about the importance of the interoperability and offline capability of hypothetical e-HKD have laid a solid foundation for their future studies. They look forward to supporting Hong Kong Monetary Authority in the next phase of the e-HKD pilot programme.

Also commenting on this development, G+D’s officials said they are honoured to have partnered with Standard Chartered Hong Kong for the e-HKD pilot programme. Their combined expertise complements and supports the innovation ecosystem that will be instrumental in shaping the future of public currency. They look forward to continue working closely with the Hong Kong Monetary Authority and Standard Chartered Hong Kong to bring innovation and build resilience for Hong Kong's payment infrastructure.

.