Japan’s international payment brand JCB Co., Ltd. (JCB) has launched the JCB Digital Currency (JCBDC) phase 2 pilot project with France-based identity technologies firm IDEMIA, and Malaysia-based fintech company Soft Space Sdn Bhd.

The trio said in a recent statement that in phase 1 of the JCBDC project, JCB, IDEMIA, and Soft Space developed a central bank digital currency (CBDC) payment solution, enabling merchants to accept CBDC without the need to modify their point of sale (POS) terminals and payment cards.

This solution was successfully piloted in Tokyo in 2023, which has enabled JCB, IDEMIA, and Soft Space to proceed to the next phase of the project.

In Phase 2 of the JCBCD project, customers will be able to transfer CBDC funds from one person to another person using their cards and mobile phones even without Internet connectivity.

These offline P2P (peer-to-peer) fund transfers can either be done from one card to another with a mobile NFC device as an intermediary, or from one mobile near-field communication (NFC) device to another mobile NFC device directly.

This project is compliant with the open White Label Alliance (WLA) payment standard and using secure elements to ensure optimal security.

In one option, consumers can send CBDC funds offline by tapping one person’s card to another person’s mobile NFC device.

Then another person can tap their card to their mobile NFC phone to receive CBDC funds.

Such a stored-value card (SVC) is used to securely store and transfer offline CBDC funds, thus acting as a digital version of cash in lieu of paper banknotes.

Another option for consumers is to transfer CBDC funds offline by tapping their mobile NFC device to another person’s mobile NFC device.

Both payer’s and payee’s mobile NFC devices operate off the network when CBDC funds are sent and received.

For this project, IDEMIA and Soft Space provided the tokenization back-end server, mobile wallet application, card application and SoftPOS solution, as well as all necessary application programming interfaces (APIs) and software development kits (SDKs) for system and application integration purposes.

The project uses IDEMIA’s protocol, the industry standard for Offline CBDC Payments, and leverages on Soft Space’s expertise in contactless payments.

This JCBDC project is aimed at ensuring that CBDC fund transfers can be done securely and conveniently, by anyone, at any time, with or without Internet connectivity, with an immediate guarantee of fund availability.

JCB, IDEMIA and Soft Space will implement the second phase of the project and conduct a pilot in early 2024.

“It gives me great honor to announce our collaboration with IDEMIA and Soft Space on this Phase 2 project continuing from Phase1,

“This project proves that we can use offline P2P funds transfer for new CBDC payment systems, which is a huge benefit for consumers in wide range of generations.” said Koremitsu Sannomiya, Board Member, Senior Executive Officer of JCB.

Meanwhile, Romain Zanolo, IDEMIA Managing Director for Asia Pacific (APAC) Payment Services, said that this project highlights IDEMIA’s expertise and capacity for innovation in terms of CBDCs.

“We are convinced that allowing the public to transfer funds offline either with their contactless card or with their mobile phone will give them a great flexibility of choice,

“With this new phase, we continue to build on the expertise gained from previous successes with central banks across the world,” he added.

Joel Tay, Chief Executive Officer of Soft Space, said that the firm is delighted that phase one of the project has been successful, leveraging on existing technologies that JCB already utilizes, such as its contactless Europay, Mastercard and Visa (EMV) technologies and Tap on Mobile SoftPOS.

“In phase two, we will also evaluate host card emulation (HCE) and various other offline scenarios we are developing with JCB to further develop more real-life use cases aimed at ensuring that the eventual CBDC solution we implement will be of practical use in society,” he added.

JCB is a major global payment brand and a leading credit card issuer and acquirer in Japan.

The firm launched its card business in Japan in 1961 and began expanding worldwide in 1981.

Its acceptance network includes about 43 million merchants around the world.

JCB Cards are issued mainly in Asian countries and territories, with more than 154 million cardmembers.

As the leader in identity technologies, IDEMIA’s mission is to unlock the world, make it safer, backed by cutting-edge research and development (R&D) and a long-standing expertise in biometrics and cryptography.

With nearly 15,000 employees, IDEMIA is used by over 600 governmental organizations and more than 2,300 enterprises spread over 180 countries.

Founded in 2012, Soft Space is a fintech firm serving over 80 financial institutions and partners across 30 global markets.

The firm offers both merchants and consumers a range of solutions, such as contactless payment through mobile devices as well as comprehensive white-label e-wallet services.

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