The National Bank of Rwanda (NBR) is preparing to move its retail central bank digital currency (CBDC), e-FRW, into a pilot phase following a proof-of-concept (PoC) that demonstrated the currency’s potential to strengthen financial-system resilience, expand access, and support innovation. The PoC tested multiple payment modes across varying levels of infrastructure and connectivity, positioning the e-FRW as digital public infrastructure rather than a purely technical upgrade. These included instant online transfers, offline smartcard payments, dual-offline transfers where both parties lacked connectivity, and USSD access for feature-phone users.
Pilot Plans
The 2026 pilot will expand participation beyond controlled demonstrations, covering Kigali, a secondary city, and selected rural locations. It will involve multiple financial service providers, set common APIs and message formats, and run for 12 months. Initially, users will transact with “gifted money” to evaluate user experience before selected flows move to “real money,” allowing NBR to measure behavior and outcomes against defined key performance indicators. The pilot will also broaden merchant use cases and make USSD a primary access channel, ensuring that users across the country, including those in rural areas, can participate.
Payment Modes and Functionality
During the PoC, the e-FRW was designed to operate as a versatile form of digital cash capable of functioning across different levels of infrastructure. Offline smartcard payments rely on tamper-resistant Secure Elements that store e-FRW balances locally, allowing users to complete transactions without internet or cellular connectivity. Dual-offline transfers are validated through cryptographic certificates stored on the devices, preventing double-spending while updating the central ledger once connectivity is restored.
For users with basic phones, USSD functionality enables wallet creation, balance checks, and fund transfers using simple text-based menus, supporting financial inclusion. Online transactions for smartphone users are processed in real time, providing immediate finality and allowing merchants to reuse funds immediately. Wallet-level programmability enables targeted disbursements, parental controls, or corporate spending logic without altering the currency itself, maintaining the neutrality of the e-FRW while allowing flexible payment conditions.
Security and Resilience
Security and privacy are central to the e-FRW design. The system is built with default privacy-by-design features to protect users while maintaining traceable links for anti-money laundering compliance. Transactions require two-factor authentication, including PINs or biometric verification for smartphone users. The NBR supervises banks and telcos to enforce strict cybersecurity measures, ensuring the integrity of transfers across mobile networks.
Offline transaction capabilities further strengthen resilience, allowing the currency to remain functional even during network outages. The PoC employed a deferred settlement model, whereby encrypted receipts from offline transactions are stored locally and reconciled with the central ledger once devices reconnect, ensuring both security and accuracy.
Smartcard Offline System
Offline transactions rely on hardware-based security, with smartcards and merchant devices containing Secure Elements that store balances on-chip. Transactions occur directly between devices through NFC or Bluetooth, with cryptographic protocols verifying funds and preventing double-spending. The chips deduct balances from the payer and create them on the recipient device instantly.
During periods without connectivity, transaction records are stored and later uploaded to update the central ledger, ensuring reconciliation and synchronization. This system was designed to mirror the resilience of physical cash while enabling secure digital functionality in areas with limited infrastructure.
Interoperability and Ecosystem Integration
The e-FRW digital currency is intended to complement existing payment systems, including Mobile Money and commercial bank transfers, rather than replace them. The pilot will explore cross-border interoperability, aiming to reduce the costs and delays associated with regional remittances. By positioning the digital currency as part of Rwanda’s financial infrastructure, NBR hopes to integrate the e-FRW seamlessly with existing services while enabling programmable payment flows and innovation in merchant and user experiences.
Transaction Limits and Conditions
To balance inclusion and security, the e-FRW pilot will implement tiered Know Your Customer requirements, where accounts with lower identification face stricter transaction and balance limits. Spending rules and programmable conditions will be applied at the wallet level, allowing targeted disbursements, parental controls, or corporate expense logic while leaving the currency itself neutral. Merchant incentives, such as potentially lower fees compared to existing digital payment options, are being considered to encourage adoption and usage during the pilot phase.
Challenges Identified During PoC
The PoC highlighted several operational and logistical challenges. Hardware costs for secure smartcards and devices are higher than software-only solutions, while storage limitations in Secure Elements require periodic connectivity to clear transaction records.
Lost or stolen smartcards present recovery challenges, as funds are stored directly on the chip, and counterfeit prevention requires continuous updates to hardware and security protocols. Despite these hurdles, the PoC validated the technical feasibility of the e-FRW and its potential to operate in rural areas and during network disruptions.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.