“Has the payment already been completed?”
The Bank of Korea's Central Bank Digital Currency (CBDC) real-use test was conducted for the first time. This test, named 'Project Han River', is a large-scale initiative launched under the leadership of the Bank of Korea, in collaboration with the Ministry of Science and ICT, the Financial Services Commission, and the korean Federation of Banks, along with seven banks (IBK Industrial Bank, KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, NH Nonghyup Bank, and BNK Busan Bank). One hundred thousand ordinary citizens will participate in the test from the 1st of this month until June 30. On the test initiation day, the reporter directly participated in Project Han River.
The first step in using the CBDC is to open an electronic wallet. Opening an electronic wallet is done through each bank's mobile application (app). The process involves agreeing to the terms and conditions, taking an ID photo, verifying the bank account, confirming identity, linking the account, and setting a password. The time taken to create the electronic wallet after completing all procedures is 5 minutes. Since customers who have already completed identity verification and account opening at each bank are the test subjects, the time taken to open the electronic wallet was not long.
Once the electronic wallet is created, the next step is to charge the 'deposit token'. The deposit token refers to the digital currency charged within the electronic wallet. It is also a payment method for Project Han River. When the money stored in the user's bank deposit account is transferred to the electronic wallet, it becomes a deposit token. Charging the deposit token is also conducted through the electronic wallet page in each bank's app. There is no need to input additional information other than setting the charging amount. This is because a linked account was designated while creating the electronic wallet. Just like using simple remittance services like Toss, charging and returning can be done with just a few touches. The entire process of charging and returning takes about 20 seconds.
If the deposit token has been acquired, all preparations to utilize the CBDC are complete. Users can use the deposit token as a payment method at designated online and offline merchant sites during the pilot project. Payment with the deposit token is conducted using a QR code within the bank's app. After charging the deposit token, I headed to a 7-Eleven store in downtown Seoul. Without saying anything, I showed the QR code to the store staff, who also scanned the QR code without a word, and the payment was completed in 2 seconds. I then moved to an Ediya Coffee store to attempt a deposit token payment. Similarly, the time taken for the payment was only 2 seconds.
The actual deposit token payment experience was aptly described by the expression 'the belly button is bigger than the belly.' One of the main objectives for introducing the deposit token payment service is to enhance payment convenience. As long as there are deposits in the bank account, payments can be made both online and offline with just a smartphone, without the need for a wallet. However, this advantage has already been implemented by existing simple payment services that have entered the market. It is true that the 2 seconds taken for deposit token offline payment is short, but other simple payment methods also complete transactions within 2 to 3 seconds, and at most 5 seconds. Compared to existing simple payment methods, there is no user benefit that only the deposit token can present.
Rather, the inconvenience arising during the process of use is a problem with deposit token payments. The preparation process for deposit token payments involves starting the bank app, accessing the electronic wallet page, entering a password, displaying the QR code, and re-entering the password in that order. Users have to enter the password twice, and due to the nature of the bank app, it operates slower than fintech apps, leading to frustrations. There is a paradox where one has to go through inconvenient preparations to use a convenient payment service. With Samsung Pay, payment preparation is completed with just one touch, and with Apple Pay, it takes two button presses.
The Bank of Korea plans to collect the results after the test concludes and commence service improvements. The Bank will gather user feedback to reflect improvements and finalize the system before conducting follow-up tests. In the follow-up tests, services such as person-to-person remittances and digital voucher programs are also planned to be introduced.