A few years ago, it seemed that there was a kind of a disconnect between Hong Kong’s reputation as an international hub for fintech startups and the fact that there were no full-fledged digital payment solutions entirely accepted by the people living and working in the city.
However, the situation started to change and mobile payments started gaining in popularity as Hong Kong and other cities within the Greater Bay Area (GBA) continued to experience rapid economic growth and further develop their collaborative regional ties.
The synergistic relationship between consumers, enterprises and tech giants is leading Hong Kong in a shift towards a cashless society. The business interactions between these major players are evolving and things appear to be moving towards a ‘Mainland China scenario’.
With digitized payment ecosystems and the development of smart cities, consumer demand for convenience and efficiency regarding payments does not come as a surprise. Users worldwide including Hong Kong are looking for more personalized services, seamless payment experiences, and integrated payment interfaces.
Thanks to the Hong Kong Monetary Authority's Faster Payment System which connects 21 banks and 10 e-wallet platforms into a single system and allows Hong Kong Dollar or Renminbi payments, residents of Hong Kong are becoming increasingly familiar and comfortable with these new methods.
As Quick Response became the standard for retail payments, transfers between banks and stored value facilities (SVFs) require only email addresses, mobile phone numbers, and QR codes — making mobile payments easier for users in Hong Kong.
According to a recent survey, online spending is taking over offline spending in Hong Kong, with one in five people opting for e-payments. Also, the same survey records that consumers would be even more prone to use mobile payments if offered discounts for their digital transactions or waiver of shipping or other delivery fees.
Still, unlike mainland China where over 583 million people used mobile payments in 2018, consumers in Hong Kong have stronger concerns about data privacy and security issues still affecting the digitized payment ecosystem — this is one of the most important reasons for the region’s slower acceptance of digital wallets.
Another reason for a slower mobile payment acceptance is the fact that Hong Kong is a densely populated and well-organized environment and people can find anything they need within walking distance. In-person interaction and payments are still the main way of exchange, especially in the retail market.
Companies are putting more stress on customer-centric experiences as they realise how their consumers are becoming more tech-savvy. Some Hong Kong-based CEOs identify the improvement of the customer journey as their top priority and strategic goal that can enable them to stay ahead in the game.
Earlier, the move towards e-commerce in HK had been slower compared to other GBA cities partly because of businesses' unwillingness to create online offers. This is a result of businesses' reservations about adequate and qualified support to develop such systems, concerns about the integration of data, and being uncertain about which technology would bring the best ROI.
Luckily, technology is becoming more available and systems which any SME could only have imagined a couple of years ago like adaptive authentication, mobile authentication, biometric recognition software, and AI-driven data-mining apps are now more available and affordable.
Businesses are increasing their offer and improving loyalty programs by creating solutions such as UniCard prepaid card programs with advanced mobile application options. Customers can have a more transparent and real-time oversight into things like their balance, transactions, and card-to-card transfers, along with the benefit of using the UniCard Mastercard prepaid card anywhere in Hong Kong and the world where the trademark of Mastercard is displayed.
Retail consumption remains the pillar of the economic growth in China and more consumers are turning to their smartphones for almost any type of purchases than ever.
For all these reasons, millennials and the digital-native generations are increasingly looking for seamless and transparent shopping experiences. Enterprises and retailers that offer products and/or services are implementing more and more digital transaction channels and switching to the mobile payment economy.
In addition, this change is driven by the fact that tech giants like Alipay and WeChat Pay have entered the Hong Kong market.
The competition for users is fierce and Alibaba (AlipayHK), Tencent (WeChat Pay HK), and the likes are leveraging their online platforms to gain primacy in Hong Kong. Their technology and greater insight into Hong Kong customers’ behaviour, preferences, and spending tendencies offer them unparalleled resources for integration of their services into everyday activities like shopping, ordering food, hailing rides, and booking - all done via mobile devices.
Compared to traditional financial institutions, they can meet customer demands and offer enhanced experiences thanks to their platform's infrastructure, in a faster and more flexible way. Thanks to the advanced data analytics, they can also create more personalized products and services.
Finally, new tech is pushing traditional financial institutions to adapt and become more client-focused; they are improving their virtual banking systems and even cutting down on certain fees and in that way, promoting digital payments among clients as well.
All in all, mobile payments are on a steady path of becoming an inseparable part of the lives of the people in Hong Kong. Consumers are looking for a seamless and enhanced payment experience that matches the demand of modern lifestyle. And even though many express privacy and safety concerns regarding the use of e-wallets, integration into the daily activities of Hong Kong residents is accelerating.
Companies are listening to consumers’ pulse and along with technological giants, fintech innovators are looking for ways for Hong Kong dwellers to accept mobile payments as a standard way of money transaction more easily. Competition for customers in the city is fierce and it appears that the people will experience the benefits as a result of this race for new users.