Does Hong Kong Need Mobile Payment If People Are Happy With Octopus Card?

An article published at Hong Kong Economic Journal saying that as a financial powerhouse in this part of the globe, Hong Kong lags behind other cities in terms of adopting mobile payment. That may be true but it’s not accurate to say that Hong Kong is slow in embracing a cashless society.

While there is an aggressive push to promote mobile payment — Apple Pay, Samsung Pay, Alipay Wallet, WeChat Pay to name a few, these providers are trying to get everyone’s attention as the prefered method of payment.

Mobile e-wallet services have been proliferating as the Hong Kong Monetary Authority issued stored value facilities licenses to 13 mobile e-wallet service providers in 2016. Yet, adoption is slow. HKMA data showed that in the first quarter of 2017, the total number of transactions by SVF was 1.35 billion, a 3.7 per cent quarter on quarter fall, with the transaction value at HK$29.4 billion, down 1 per cent.

These facilities may come from be well-known brands such as Tencent, HKT and Alibaba, but if they offer no added value to the existing and beloved Octopus card that’s ubiquitous to Hong Kong daily life, these apps might take extra efforts to gain wider adoption.

“It is a complete chaos,” said Emil Chan, chairman of the Smart City Consortium Fintech Committee, of the crowded mobile payment presence in Hong Kong, comparing them to granting of more than a dozen bus services.

One of the firms granted stored value facilities is Octopus Cards Limited, the company behind Octopus cards we use every day. Not to be outdone by the upstarts, it also launched O! ePay service as response to the supposed growth in mobile payment usage.

The introduction of these mobile payment facilities does not necessarily bode well for both customers and merchants.

Customers may see them as duplicate to Octopus card

  • Customers need to download the e-payment app to make use of it. To do so, certain credits are introduced to encourage adoption and use. But concerns of snooping on stored data as well as news on suspected data breach on personal information on mobile devices have put a damper on the enthusiasm. Meanwhile, an overhyped HSBC PayMe app got an embarrassing experience when it launched, citing “overwhelming demand.”
  • The problem with these mobile payment apps is that they’re not interoperable. If I use Alipay, but the shop only accept cards, or other mobile payment options like Samsung Pay or Apple Pay, my method of payment is useless.
  • On the other hand, Octopus cards are widely used, and continues to expand its applications. The folks who use different methods of mobile payment facility may have only one common thing on hand: an Octopus card that can be used to pay for MTR or bus while these other payment methods can step aside.

Merchants may see them as unnecessary burden

  • Retailers are typically charged annual rental fee and slice a certain percentage as transaction fee for every mobile payment transaction.
  • For cashiers, each mobile transaction needs to be tallied separately for accounting purpose. Extra effort is likewise required to check mobile payment statements when accountants prepare regular financial statements.

So why complicate our financial transactions? Credit cards and Octopus cards have been making life convenient. So unless they bring extra value better than existing payment options — like expanding partnerships with transport facilities, mobile messenger apps, credit card providers or MTR fare payments — adoption rate may not be promising.

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