ANZ reveals test success in offline payments system

CBDC Pilot test ANZ offline

Big four bank ANZ has revealed it last May successfully conducted the transfer of a Central Bank Digital Currency (CBDC) through an offline network – a proof that consumers could still purchase goods even when disconnected from traditional payment rails.

The pilot, the details of which were first unveiled in February, seeks to establish whether CBDCs could address situations where online connectivity is absent, such as during major outages (for instance, during a flood or bushfire event) where ATM and EFTPOS terminals may be unavailable, in remote areas with limited access to telecommunications infrastructure, or for unbanked consumers.

The project was part of a wider CBDC pilot organised by the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC), which is exploring use cases for a CBDC in Australia.

The aim of the ANZ-led project, the bank said, was to demonstrate how an organisation (in this case, a university) could step in during an emergency to provide immediate financial support through the distribution of CBDC.

The choice of a CBDC (a central bank-issued electronic version of a country’s fiat currency) for the test was deliberate. The emerging digital currency not only supports instant value transfer between users, but also improved security and anti-fraud buffers, with transaction finality established through distributed consensus with private key cryptography, and access to those who may not have a bank account by enabling a peer-to-peer exchange of fiat currency.

Partnered with ANZ in the trial are universities RMIT and Southern Cross (SCU) and vendor partners Capgemini Australia, Secretarium, Thales DIS France, and SAS, and ANZ’s payments arm Worldline Payment Solutions.

The project team developed both the infrastructure and ‘cash-like’ smartcard solution.

This smartcard was pre-loaded with a CBDC, enabling SCU and RMIT students to make purchases at on-campus merchants, including cafes, gyms and bookshops.

Utilising a smartphone’s inbuilt NFC capability, payments-receiving merchants were provided with a dedicated app to accept the students’ card payments at the point of sale, which effectively functioned as cash sales.

Merchants could then use this app to view the CBDC they received and select to redeem their CBDC balance into fiat currency – dollars and cents – which could then be transferred to their bank accounts.

The first purchase, ANZ confirmed, was a cup of coffee.

ANZ Institution’s manager, industry and innovation, Cindy He wrote in a blog post that the “solution built for this pilot uses confidential computing technology to respect the privacy of individuals while remaining compliant with regulatory requirements, including anti-money laundering rules”.

She added: “At ANZ, we are continuously innovating and collaborating across industries to enable customers to unlock new opportunities, expand their reach and drive growth in an increasingly digital and interconnected world.”

“We are still testing and learning as part of this pilot and are seeing some interesting results and we look forward to sharing more about what we’ve learned.”