Singaporean bank DBS on Monday announced a partnership with Open Government Products (OGP) to launch a live pilot where purpose-bound money-based vouchers (PBM vouchers) are issued using tokenised SGD to facilitate “real-world” live transactions with selected merchants.

This forms part of Project Orchid, an industry effort led by the Monetary Authority of Singapore (MAS), to develop the technology infrastructure and technical competencies to enable a programmable digital Singapore dollar (DSGD), DBS said in a statement.

By leveraging blockchain technology, PBM vouchers will be created using DSGD issued by DBS, with smart contract capabilities enabled by OGP. This will enable issuers to program and self-execute the distribution and usage of the voucher to designated recipients.

For small and medium-sized enterprises (SMEs) and businesses with retail shopfronts this means that they will be able to benefit from instant settlement, payments and collections with their banks when customers use digital vouchers.

This will help time and resource starved small businesses increase cashflow and save time on administrative backend tasks. The current process involves one to two days of processing time before merchants actually see the money credited into their bank accounts.

DBS believes that its live pilot with Open Government Products will be useful in scenarios such as the Community Development Council voucher scheme where Singaporean households receive CDC vouchers to help cope with rising inflation and cost of living.

Majority of these vouchers are now digital vouchers but involve some backend administration for the merchant.

However, with PBM vouchers, merchants will be able to be paid instantly, doing away with backend reconciliation, increasing productivity and efficiency.

By starting the pilot with the food and beverage (F&B) industry in Singapore, in future, PBM vouchers issued using tokenised SGD could benefit Singapore’s 28,000 coffee shops, hawker centres and restaurants .

“Many businesses we speak to, of all sizes and even non-governmental organisations (NGOs), want to urgently realise productivity gains from digitalisation but are unsure of how to do so,

“The live pilot demonstrates the feasibility of programmable money to foster an even more efficient, trustworthy and robust payment system, especially for time and resource starved businesses. This solution could help businesses and NGOs leapfrog into the future of money,” said Shee Tse Koon, Singapore Country Head of DBS.

According to him, “Purpose bound money” will be immensely transformative especially when governments, businesses and individuals come together with a collective vision to adopt the use of digital money on inter-connected networks to realise a fully transparent and efficient global financial infrastructure for payments.

“It also further reinforces how blockchain technology can be the bedrock to build the next generation of payments and settlement infrastructure on – not only because of its immutability and accessibility, but also for its programmability by leveraging smart contracts,” he added.

The live pilot will involve up to 1,000 selected consumers and six merchants, including popular F&B outlets such as Nanyang Old Coffee, Sarnies, Pickleville, The Working Class and The Three Anchovies at the central district for a duration of four weeks starting from 27 October 2022.

DBS foresees that programmable money will also be useful in the area of purpose-bound donations, sustainability financing, and facilitating the payment of multi-step conditional processes such as conveyancing payments in property transactions.

DBS and OGP have also contributed to a MAS-led industry white paper issued earlier today that introduces the concept of purpose-bound money and the potential benefits of programmable digital currency through various use cases.

“Through piloting a ‘purpose bound money’, we demonstrate how we can make it easier for the Government to implement voucher programmes through smart contracts,

“We want to test how we can potentially make settlement faster and less costly, and reduce the reconciliation effort of banks, voucher issuers and merchants,” said Li Hongyi, Director of Open Government Products.

“If verified to be helpful, perhaps such a model – in which merchants receive DSGD immediately with each voucher redemption instead of a voucher (and needing to be reimbursed separately) – could be a model extensible to future other government programmes,

“We intend to work more closely with industry partners such as DBS to test such a concept, and will share our technical documentation more widely,” he added.

According to the statement, DBS has also worked on several public and private sector blockchain initiatives aimed at transforming the future of payments over the years.

From co-founding Partior in 2021, to leading experiments with like-minded industry players on MAS-led Project Orchid and Project Guardian this year, DBS has been consistently experimenting and leveraging the power of emerging technologies to create a more efficient and safer payments landscape.

The bank was also part of Project Ubin, an industry initiative by the Monetary Authority of Singapore to explore the application of blockchain technology involving multi-currency payments and settlements since its inception in 2016. Project Ubin was the launch pad for the development of Partior.

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