Central bank digital currency Proof of concept for a central bank digital payment platform
The central banks in many countries are trying to promote digital payments to replace cash payments (i.e. paper notes and coins). 

The goals are:
a) To reduce the cost of handling paper notes and coins
b) To combat counterfeit and fraud
c) To improve efficiency in handling retail payments. 

So far, none of the central banks have succeeded. The central bank in China and a few other countries have made some progress, but they are still far from achieving their goals.

Some experts recommended that the central bank system has to use blockchain technology. I disagree with this approach. This technology is costly to implement and to process the transactions. It is perhaps the key reason that impedes the implementation. 

The central bank in China has decided to drop blockchain technology for its retail payment system. (It is still exploring the technology for other possible use cases). I agree with their approach. 

To enable digital payment to replace cash payment, the central bank platform the following features:

a) The transactions have to be processed efficiently, i.e. avoid blockchain technology.
b) The merchants can accept digital payment easily, e.g. they can use a mobile app or a POS device.
c) The customer can pay easily, e.g. they can pay with a mobile app or a payment card that is linked to an e-wallet.
d) The customer can use an anonymous e-wallet that is not linked to a bank account or mobile phone.
e) Top ups of the e-wallet can be made by bank transfer, or at a kiosk or retail outlet.
f) The central bank can approve several payment platforms to provide the service and ensure that the platforms are safe, secure and independently audited on a daily basis.
g) The payment platforms have to be inter-operable, i.e. users on different platforms can make payments to each other. (This is similar to the banking system).
h) The digital payment should be free to the customer. 
i) The merchant may pay a small transaction fee, that is not more than the fee they pay for cash deposits.
j) The users will be paid interest on their balances above a threshold. The interest rate should be as attractive as interest on saving accounts with the banks.

I have the platform that have these features and can serve as proof of concept. I hope that a central bank will be interested to explore this platform. 

My "proof of concept" platform makes digital payment more convenient and less costly for customers and merchants, compared to the traditional cash payments. It also addresses the need for privacy and can serve customers who do not have a mobile phone or bank account.

Tan Kin Lian

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