Tech Updates

Digital payment fight brewing in Hong Kong

3 Mins read

HONG KONG: Hong Kong’s buying districts are widely known for their fierce competition. A brand new battleground is forming as digital price firms fight for retailers and consumers.

Chinese tech giants like Tencent and Alibaba are bringing their price platforms to a city that has long thrived on coins and credit playing cards, placing them into competition with the likes of Google, Apple, and Samsung and neighborhood players like HSBC.

“Hong Kong is probably a little in the back of other places in terms of virtual bills, so we see a rush to set up a primary mover advantage,” stated Fergus Gordon, who leads Accenture’s Asia-Pacific banking exercise.

The metropolis has become an essential checking out the ground for Tencent’s WeChat Pay and Alibaba’s Alipay, dominant competitors in mainland China, as they look to set themselves up overseas.

AlipayHK, a joint venture between Ant Financial, Alibaba’s payments arm, and the Hong Kong conglomerate CK Hutchison, says its customers have jumped 50% to at least one. Five million in view that March.

WeChat Pay does not expose its consumer numbers in Hong Kong.

Visa says that as of the closing of April, one in 10 Visa bills in Hong Kong were made using ApplePay, SamsungPay, or GooglePay, doubling from a year in advance. HSBC said in July that it reached 1,000,000 users for its peer-to-peer payments app PayMe.

Hong Kong has been slow to embody cell bills partially because of the ubiquity of Octopus, a once ground-breaking saved-fee card that is commonplace by way of 22,000 organizations like convenience stores and small restaurants and is widely used on public transport.

Despite the boom of cellular bills, present-day spending behavior may be tough to alternate.

A July Hong Kong Productivity Council survey found that the most extensively used cell price methods were Alipay and WeChat Pay; however, they were used by only 22 and 19% of respondents, respectively.

However, ninety-seven % of respondents stated they used Octopus playing cards.

Lack of familiarity and issues with statistics leakage have been the most common reasons for not adopting the new mobile charge structures.

Octopus playing cards were first released in 1997. Twenty years later, there have been 34. Four million playing cards in the move — almost five in line with Hong Kong residents, keeping with the business enterprise.

But even Octopus is feeling the heat from the opposition. Net earnings fell with the aid of one-third in 2017 to HK$272 million (US$34.66 million).

However, Sunny Cheung, Octopus’ leader govt officer, instructed Reuters that the numbers had been a one-off because the organization had been spending heavily on generation and cybersecurity.

Nevertheless, he delivered that the company had the edge over the newbies, especially with small businesses long used to Octopus bills. “Acceptance is key, especially in the ‘mom and dad’ shops.”

An AlipayHK spokeswoman stated the organization sought to entice users by imparting unique discounts.

“At the same time, we’re looking for cooperation with numerous merchants to boost the penetration of AlipayHK to trade consumers’ conduct grade by grade,” she stated.

Merchant cooperation is tough to get proper, although due to the differing tastes of purchasers.

Edward Ho owns a store promoting luxury baggage in Hong Kong’s teeming Causeway Bay buying district, signed up for Alipay for the remaining year but gave up after clients confirmed little hobby.

“Unless those systems are as popular as Octopus, I might not don’t forget them,” he said.

However, James Lam, who runs the watch shop next door, mounted Alipay after one traveler from mainland China would simplest buy a timepiece using Alipay or WeChat Pay.

He now encourages nearby clients to use virtual wallets, too.

As nicely as purchasers call for, new initiatives attract marketplace hobbies.

This month, MTR Corp invites tenders to create a new QR code-primarily based payment device for traveling at the metropolis’s subway gadget. The primary bank plans to roll out a quicker payment gadget in September to allow real-time processing.

Visa has stated it’ll bid for the MTR gently, and market insiders count on Alipay and WeChat Pay to additionally participate.

Cheung declined to touch upon Octopus’ plans for the smooth. Tencent did not reply to a request for comment, and AlipayHK stated that e-price on public transport is something the enterprise “is actively operating on”.

While the cell bill companies may be seeking to supplant Octopus’ dominant role in the public transport machine, in the end, their purpose, analysts say, could be to create a much wider community of offerings that can vary from meal shipping and ride-hailing to financial services and lending.

“It is difficult to make money from payments. However, they can be the glue that ties together surroundings of services,” said James Lloyd, Asia Pacific fintech lead at Ernst & Young.

“The corporation that succeeds in Hong Kong may be the only one that learns this lesson,” he introduced.

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