(Yicai Global) June 29 -- China is exploring adding a digital yuan payment function to social security cards, according to the Ministry of Human Resources and Social Security.

With the function, the government could issue e-yuan subsidies to specific groups, such as basic living allowance to low-income people and those to farmers for agricultural machinery and seeds, a source at a large state-owned bank told Yicai Global.

Under the current system, restricting the final use of such funds is hard despite high regulatory costs, the banker noted, adding that the digital yuan is traceable and tamper-proof, thereby enabling the government to make payments more targeted and efficient. Use of the e-yuan will bring unique abilities to the government's digitized and smart governance, the person said.

Worth the same as its physical counterpart, the digital yuan is issued by the People’s Bank of China and can be used through the official app or payment platforms such as Alipay and WeChat Pay. Millions of vendors and more than two dozen Chinese cities are piloting its use.

“Adding a digital yuan payment function to [social security] cards can expand the e-yuan’s user base and application scenarios” as every Chinese citizen has one, Wang Pengbo, a senior financial analyst at consultancy firm Botong, told Yicai Global.

Issued by the ministry, the cards have several functions, including identification, information record, pension collection, and contribution and issuance of social insurance and government allowances. It is also the key tool for cardholders to access human resources and public service benefits.

“The e-yuan’s scope would be further expanded if cardholders' e-yuan and social security accounts were also linked,” Wang said.

Editors: Tang Shihua, Futura Costaglione