Japan’s JCB has launched “JCBDC” (JCB Digital Currency) pilot project with IDEMIA and FinTech company Soft Space .

JCBDC pilot will develop a CBDC (Central Bank Digital Currency) payment solution and conduct a pilot test with Tokyo merchants.

Over the past few years, central banks in many countries and regions have been testing CBDCs that should soon be widely accepted by consumers and merchants.

However, merchants might be reluctant to accept them, and mass-market rollout may be held up by people without smartphones, like children and the elderly, who could find the user interfaces and payment systems hugely challenging.

As a result, JCB will have CBDC acceptance tested using existing JCB Contactless – JCB’s EMV based contactless payment, merchants, POS terminals and plastic card-based user interfaces, with guidance from IDEMIA and Soft Space.

JCB also announced a second project for machine-to-machine (M2M) offline payments, which could potentially be used for CBDC.

For the first project, Soft Space has an application, ‘Tap on Mobile’, that enables mobile phones to act as POS terminals with debit and credit cards.

Hence CBDC payments using payment cards will be routed through the conventional card network and eventually to JCB’s blockchain-based CBDC network.

The second project for machine-to-machine (M2M) offline payments is an extension of an existing initiative with enterprise blockchain start-up Keychain.

Together they’ve been working on a layered payment solution with a network sitting between the cloud and physical devices.

This intermediate layer provides scalability with high volumes of micropayments and makes it less centralized, with blockchain used to enable a secure log of payment history.

Devices such as routers or servers close to the user perform the authentication function even if the central payment platform is offline.

JCB, IDEMIA and Soft Space will conclude payment system development by late 2022 and conduct the pilot test with Tokyo merchants until March 2023.