The Chinese central bank recently put its digital currency on trial in the city of Shenzhen. Around 50,000 residents participated in the trial, and many felt it was just as easy to use as the Alipay and WeChat Pay methods that they have been used to.

Without the need for a bank account and internet access to use the digital currency – which is very different to a digital wallet – the differences between the two are what will drive a truly cashless environment. Most importantly, digital currency is the key to achieving total financial inclusion.

In early October, the Chinese central bank trialed the issuance of its own digital currency – the Digital Yuan – in Shenzhen. Over 19 million residents of the city participated in the registration for the draw and 50,000 were issued with a digital red envelope of RMB200 ($30) in digital currency. Across the city, over 3,000 merchant locations had also been set up to accept digital currency, and consumers were able to pay for goods and services using digital currency or even make peer-to-peer payments.

Those who used the digital currency said that the experience was very similar to that of Alipay or WeChat Pay. However, this digital currency does not simply ape that model but builds on it, bringing with it the possibility of extending financial inclusion to universal levels.

While the usage experience of digital currency will be very similar to that of a digital wallet, there are some very significant differences. Unlike mobile wallets, digital currency is just like bank notes and coins, except that it is digitised and can be stored in a mobile phone; a wallet requires an account of some kind (even if just a prepaid account) to be linked to it. Just like as if cash were taken out of an ATM, the cash stays with the owner and, in the case of digital currency, it stays in the owner’s phone, hence there is also no need to be connected to the internet for digital transactions to be completed.

With different requirements and internet infrastructure, the characteristics of the digital currency without the need for a bank account and internet are especially relevant for the unbanked and underserved segment. People living in developing economies, especially in rural areas where it is not efficient for banks to operate, often don’t have much money, and many banks are not interested in servicing this segment. Therefore, the digital currency usage – as demonstrated in Shenzhen over the past week – addressed the two most significant obstacles to resolving the issue of financial inclusion.

The trial in Shenzhen means that things are moving along and as such, a digital currency and electronic payment function bring along great interest from markets that are in need of such a platform.