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I got a gym membership, but before the membership expired, the gym suddenly closed.

At the end of June 2024, the large chain fitness brand "Wubai Youpin Fitness" in Qingdao was on the verge of bankruptcy and liquidation due to a broken capital chain. All its stores announced that they would stop operating and could no longer provide membership services as agreed. On July 3, 2024, Wubai Fitness officially issued a statement on store closures. Members can choose to be conditionally accepted by "Yum Bonanza Fitness" to transition their membership and renew their agreements. If they do not accept the above treatment, they can still file a lawsuit against "Wubai Youpin Fitness" and other legal means to protect their rights and interests.

The sudden closure of "Wubai Youpin Fitness" also caused thousands of members to flee, and many members are facing the possibility of having their remaining courses go to waste.

However, after "Wubai Youpin Fitness" closed its stores, some consumers received full refunds immediately.

Simply put, if consumers use digital RMB to purchase a "Wubai Youpin Fitness" membership card through the "Smart Gold Guardian" platform, the prepaid funds are protected by smart contracts and can still be refunded; if consumers purchase a "Wubai Youpin Fitness" membership card through other means, then users are likely to face financial losses.

What is the relationship between digital RMB, smart contracts, the Smart Gold Guardian platform, and Wubaiyoupin Fitness? How is the membership card purchased through the digital RMB smart contract different from the traditional prepaid card? To solve the regulatory problem of prepaid operations, does the digital RMB smart contract provide a possibility for effective supervision of prepaid funds?

The gym closed down and ran away

A screenshot of a text message shown to reporters by Qingdao citizen Wang Xiaoqian showed that he had received a refund of 299 yuan on July 5.

According to the introduction, Wang Xiaoqian purchased three surfing experience cards on the "Zhijinweishou" platform in July 2023 for a total of 299 yuan. After the purchase, his business became busy, and before he had time to use up the three times, he did not expect the store to "run away".

"This experience really made me feel a little surprised and delighted. At the end of June, it was reported that there might be problems with the operation of this fitness store. On July 4, I received a text message saying that the money I didn’t spend on the card would be automatically refunded within two days. I didn’t spend any time or effort looking for a gym, and the money was returned to the wallet in my digital RMB APP. I have suffered losses when applying for a card before, and I know it is difficult to get the recharge money back if the merchant goes bankrupt, so I was very surprised to get the money back in the first time this time. I experienced real worry-free consumption, and I am glad to use the digital RMB product of Postal Savings Bank of China." Wang Xiaoqian sighed.

The reporter learned from the interview that in September 2023, "Wubai Youpin Fitness" entered the digital RMB APP "Yuan Guanjia Mall" through the "Smart Gold Guardian" platform, and used the digital RMB smart contract technology to issue four membership cards, supporting card-buying users to use them in nine Wubai Youpin Fitness chain fitness stores in Qingdao. When users who purchase this product take a fitness class, the smart contract transfers a sum of money to the merchant wallet; unspent prepaid funds still belong to consumers.

As of July 3, 2024, "Wubai Youpin Fitness" has accumulated 51 digital RMB smart contract reservation consumption cards, involving 51 users. Currently, all users have been reached through platform announcements, text messages, phone calls, etc., informing merchants of abnormal situations and card balance refund plans. The smart contract will automatically return the unspent prepaid funds to the consumer's personal wallet.

How does the digital RMB smart contract work?

What are the digital RMB smart contracts, the digital RMB "Yuan Guanjia Mall", and the "Smart Gold Guardian" platform? What is the relationship between them and merchants?

First Financial Daily sorted out the timeline as follows:

In September 2022, the Digital Currency Research Institute of the People's Bank of China and operating institutions (such as banks) jointly launched the digital RMB smart contract prepaid consumer funds management product "Yuan Guanjia";

In March 2023, Postal Savings Bank of China launched the digital RMB prepaid consumption supervision service platform "Smart Gold Guardian";

In September 2023, "Wubai Youpin Fitness" entered the digital RMB APP "Yuan Guanjia Mall" through the "Zhijin Guardian" platform;

At the end of June 2024, all Wubai Youpin Fitness stores announced that they would cease operations and would no longer be able to provide membership services as agreed.

On July 4, 2024, consumers who purchased membership cards through the "Smart Gold Guard" platform received a notification from the platform that due to abnormal operations of "Wubai Youpin Fitness", the platform will refund the unspent funds to the "Yuan Guanjia" users within 2 working days. On July 5, users received the refund in the Digital RMB APP.

In the above links, "Meta Butler" is an application product of the digital RMB smart contract; "Smart Gold Guard" is the digital RMB smart contract application platform; the operating organization conducts technical docking with the service platform in accordance with the business and technical standards stipulated in the "Meta Butler" product and provides contract signing, performance and other related services to ensure the safety and compliance of user funds.

Specifically, "Yuan Guanjia" is an application product of the digital RMB smart contract, which is mainly used to protect the security of users' prepaid funds. The "Yuan Guanjia" product provides users with a unified prepaid funds management view in the digital RMB APP, allowing users to easily manage and track all prepaid funds.

"Smart Gold Guardian" is a digital RMB smart contract application platform, which is built by market institutions (local enterprises and Postal Savings Bank in this case) based on the digital RMB smart contract ecological service platform and operating environment to build a scenario-side application platform to assist operating institutions (Postal Savings Bank in this case) to provide digital RMB smart contract service portals for individual consumers, corporate users and governments, and provide various scenario applications and customized services based on digital RMB smart contract templates. In addition to "Smart Gold Guardian", there are many similar application platforms, such as "Sujietong" and "Prepaid Supervision".

The operating institution (Postal Savings Bank of China) will conduct technical docking with the service platform in accordance with the business and technical standards stipulated in the "Yuan Guanjia" product and provide related services such as contract signing and performance to ensure that both merchants (Wubai Youpin Fitness) and consumers can safely and effectively execute the contract and protect the safety and compliance of user funds.

How is it different from traditional fund supervision?

Compared with traditional prepaid cards, what is the difference between the membership card that successfully received a refund above?

Generally speaking, the traditional funds supervision account model is: after consumers pay the prepaid funds, the funds do not directly enter the merchant's collection account, but enter the designated funds custody account opened by the merchant. The custody bank will fully supervise the prepaid funds or freeze them proportionally, thereby realizing third-party custody supervision of prepaid funds.

The difference between "Yuan Guanjia" and the traditional fund supervision account model is that when consumers purchase merchant services, their prepaid funds enter the digital RMB wallet loaded with smart contracts. Before actual consumption, the prepaid funds still belong to the consumer, and the consumer can check the fund balance and consumption records through the digital RMB App; when consuming, the smart contract will automatically transfer funds to the merchant wallet according to the preset conditions; when the consumer applies for card return or cancellation service according to the card purchase agreement, the smart contract will ensure that the prepaid funds are accurately and efficiently returned to the consumer's personal wallet.

Zhu Feng, deputy general manager of the Digital RMB Department of the Postal Savings Bank of China, said that compared with the traditional funds supervision model, this innovative service first clarifies the ownership of prepaid funds, ensuring that the funds always belong to the consumers themselves. Even in extreme circumstances such as bankruptcy and liquidation of merchants, the consumers' unspent amounts can be effectively protected, avoiding the risk of funds being misappropriated or unable to be returned under the traditional model; secondly, through the digital RMB smart contract ecological service platform and the unified digital RMB APP interface built by the Digital Research Institute, centralized management and efficient and transparent business data are achieved, providing strong technical support for industry supervision, while also allowing consumers to have a more convenient and reassuring experience while enjoying the service.

In other words, using digital RMB loaded with smart contracts can ensure that prepaid funds are not misappropriated. For example, a consumer prepaid 10,000 yuan for a fitness card, but actually only spent 500 yuan. Once the merchant runs away, the remaining 9,500 yuan will still be supervised in the digital RMB account, which can effectively solve the pain points of prepaid consumption such as difficulty in refunding and recovery for consumers.

In recent years, there have been constant chaos in the field of prepaid funds. Some service industries have launched "prepaid" consumption methods, and launched various prepaid consumption cards such as beauty cards, fitness cards, laundry cards, and car wash cards under the pretext of "membership cards". However, after consumers purchase such "membership cards", they face difficulties in returning the cards and refunding the fees, and even the card issuing institutions run away with the money, resulting in damage to consumer rights and interests and difficulty in protecting their rights.

How to solve the regulatory problems of prepaid operations and effectively safeguard the legitimate rights and interests of consumers? Obviously, the supervision of prepaid funds in digital RMB smart contracts provides a possibility.

For consumers, "Yuan Guanjia" can effectively ensure the safety of prepaid funds, boost consumer confidence, and effectively protect consumer rights.

The relevant person in charge of the Institute of Mathematics and Computer Science told reporters that the security of prepaid funds is ensured through smart contracts, and the user's funds belong to themselves and are not affected by the business conditions of the merchant; at the same time, the transparency and immutability of smart contracts increase consumers' trust in merchants. In terms of protecting consumer rights, the automatic execution of smart contracts ensures the reasonable use of prepaid funds, and users can refund at any time.

For merchants, since consumers have doubts about the security of prepaid payments, the use of smart contracts can not only establish a compliance image and help merchants attract users; at the same time, they can also obtain other financial support from financial institutions.

"The Yuan Guanjia product supports financial institutions in strengthening the collection of merchant credit information in accordance with the law, encourages the innovative development of credit loan products and other financial measures suitable for prepaid operators, and promotes innovation and service upgrades in the financial industry." said a relevant person in charge of the Digital Research Institute.

For regulatory authorities, "Yuan Guanjia" not only improves the penetration of regulatory data, but also improves regulatory efficiency. At present, many regions are vigorously promoting digital RMB to add a "safety lock" to consumers' prepaid funds.

According to incomplete statistics, many local governments and financial institutions have launched digital RMB prepaid funds supervision platforms. Many state-owned banks and joint-stock banks, including Industrial and Commercial Bank of China, China Construction Bank, Bank of China, Postal Savings Bank of China, Agricultural Bank of China, Industrial Bank, etc., have tried this field. These local prepaid management platforms cover education and training, travel, shopping supermarkets, sports and fitness, catering, beauty and hairdressing and other livelihood industries.

Industry experts said that the "Meta-Butler" product provides a comprehensive regulatory perspective, and through the global "one account" data support, it enables supervision to more efficiently understand the merchant's capital operation. At the same time, a regulatory module can be added to the smart contract template to achieve real-time supervision during the business execution process, ensure business compliance, and enhance the intelligence and automation level of supervision.