The existence of smartphone is slowly reducing our everyday carry essentials—notepad, torch, camera, et cetera—and the newest item to be eliminated is your wallet. With just you phone, you can make a purchase everywhere in many regions, especially mainland China. Many mobile payment services even support Peer-to-Peer/Person-to-Person (P2P) payment, meaning that users can directly transfer money to another user simply using their phone without actually having to deal with cash.
However, mobile payment in Hong Kong is still taking baby steps, as only until last year the government has officially come up with a solution to regulate mobile payment services. And just by a short walk in the street, one can easily tell that cash is still the main medium of transaction in the city. Why is mobile payment still far from taking shape, here while it has become almost an inseparable part of everyone’s life just across the river in mainland China?
1. Law
There are strict requirements for mobile payment services to operate in Hong Kong. Of course, these regulations have their purpose, such as preventing money laundering and ensuring financial stability of the service providers. But all these are enforced at the expense of the user experience.
One example is PayMe P2P service by HSBC. You can simply transfer money from your account to someone’s account without having to know key in their longer-than-10-digit bank account number. Imagine you don’t have to deal with coins anymore after meal gathering. Instead, you can just simply pay your friend exactly $132.7 by tapping on your phone. Done.
But what if your friend isn’t using PayMe? Simple. He can just install it right in front of you. But as he is registering for the service, a dialog pops up, asking him for his HKID copy. “What?” he says as he quits the app. So now you still have to pay him back in cash.
With relatively strict laws and regulations in place, users of mobile payment are expected to turn in their sensitive personal data such as ID documents and address, which can be a barrier for mobile payment services to draw more users.
2. Users
Users are certainly the most important factor determining the success of a mobile payment service. No matter how good the service is, it is useless after all if no one is willing to use it. How to draw more users to your service then? It is obvious, isn’t it? You just have to be the best and people would naturally switch to your platform. But what if your target users are actually reluctant in trying at the first place?
Mobile payment is not a new concept at all in Hong Kong as it has gained quite a lot of exposure through various media coverage, and by glancing at online discussions about mobile payment, we can get a rough picture of how the general public perceive this idea.
Browsing through several local online discussion forums, we can always find negative comments regarding mobile payment. There are always doubts about the feasibility of mobile payment, for example “how’d you pay if your phone ran out of battery?” and “isn’t it dangerous if your phone got hacked?” They just haven’t accepted the new idea of paying with their phones yet.
Political factors might be an anitdote in keeping people from switching to mobile payment. Being one of the regions with the highest usage of mobile payment, mainland China is often used as an example of how mobile payment has reshaped daily life. However, probably because of politicl preferences, some might not be willing to follow the footstepes of the mainland, which can be seen in people’s response to reports about China’s trend of mobile payment.
3. Fragmentation
Mobile payment is yet to become a popular trend in Hong Kong, but it doesn’t mean that there are limited options available in the market. Indeed, there have been multiple attempts for banks and businesses to launch their own mobile payment services. Why is mobile payment not taking off then even though there are already plenty of players out there?
One of the problems of the existing services are that they are bundled to a certain services, excluding users who are not using these services. Octopus, the largest contactless payment company in Hong Kong, has offered a mobile option for users to integrate their Octopus card into their smartphones so that they can pay with Octopus directly with their devices.
Sounds great, isn’t it? But first of all, you have to be a user of one of the supported Android devices and a customer of one of the three specific telcos becuase the Octopus mobile version only works with specific SIM cards on a certain models of Android phones. In other words, your Octopus card is being integrated into your SIM card instead of your phone, and only SIM cards of specific telcos and specific phones support this awesome feature.
Is it because of technical difficulty that the Octopus mobile version has to work this way? Oyster card, the equivalent of Octopus in London, support both Android and iOS devices without forcing your to use a specific telco in its mobile payment solution.
Cleary, a much more inclusive solution is possible for Octopus. Such “business bundle” it is currently offering now is just keeping people from switching to mobile payment.
Meanwhile, some mobile payment services employ proprietary technology instead of being compatible with existing ones. For example, local mobile payment service TNG Wallet requires an extra QR code scanner as well as additional software to be installed at the cashier in order to accept payment from customers using its mobile payment service. This would create extra costs for merchants to implement its mobile payment service, escapially small ones, which reduces the adaption rate of such mobile payment services.
In contrast, Apple Pay works with existing contactless credit card readers, reducing the hassle for shops to support its mobile payment service.
If institutions of various sectors can co-operate with each other and provide a much more universal and inter-compatible system, it is a lot easier for users and merchants to adapt mobile payment.
4. Businesses
Other than users, being supported by businesses is another determining factor of the success of a mobile payment service. Again, the equation of getting more businesses to join your mobile payment network is not as simple as offering the best solution compared to others. It always depends on whether the businesses want their customers to pay them with your mobile payment network.
The idea of going cashless has emerged way before of the invention of mobile payment—credit card is one of the the earliest forms of cashless solution. Still, after decades of its introduction in Hong Kong, the convenience of credit card is still falling behind other regions as it is yet to be accepted in various businesses such as public transport. For instance, credit card is accepted on nearly all taxis in Singapore, but you are stuck with cash in Hong Kong.
_1.7_CRDi_sedan,_Comfort_Taxi_(2016-01-04)_02.jpg){kind=link}
Surprisingly, even not all local online shopping platforms are card-friendly. Some sites still require their customers to pay by bank transfer and show the ATM deposit slip upon collecting the goods.
There are still businesses in Hong Kong which are still reluctant to turn cashless with credit card, then how do we expect the city to be mobile-payment-ready in the near future?
5. Octopus
Yes. It is the card that you use to pay for your bus rides and lunch everyday. It was truly an groundbreaking idea during its debut in 1997, the age when everyone was still using dial-up internet and laptops were few inches thick. With just a simple tap, you can pay within a fraction of a second, and you can use it from paying for public transport to buying a meal and even settling your bills. It is just very convenient, and just too convenient when comparing to mobile payment.
Firstly, being the first contactless cashless payment method available in Hong Kong, many merchants have been supporting Octopus card as an alternative to cash for years, and people have already gotten used to it for long. Since there is already a successful and working cashless solution in place, why bother changing? If you are a shop owner, adding support for new methods means extra costs and risks. And for users, switching to new methods needs extra efforts. There are just little incentive for people to switch to mobile payment.
In addition, Octopus card is hard to beat from a technical perspective. It operates with an offline design, meaning that an Octopus card reader does not need to connect to the internet every time a transaction is made. It just deducts the value from the card and stores the transaction data for verification later. Therefore, paying with Octopus card is almost instant. Mobile payment, by contrast, oftentime requires either the payer or receiver, or both, to have internet connection during the transaction for real-time verification so it is unavoidably slower than Octopus card. This technical difference has left mobile payment at disadvantage right at the very beginning.
If mobile payment companies can’t persuade the public that their payment method is better than Octopus, it is unlikely to see everyone paying with their phone.
Yes, mobile payment exists in Hong Kong, but undoubtedly we are falling behind nearby regions, and these are the five reasons why is it so. Mobile payment is not definitely better than cash, but having it as a payment option gives us an extra choice of enjoying the convenience brought by the invention of smartphone after all.