ISSUE 16 English繁體简体
THEME STORY: The Inevitable Adevnt of E-payment


The Inevitable Adevnt of E-payment

We have lived with the COVID-19 pandemic for more than a year. It has not only drastically changed our ways of life, but also transformed the landscape of the market. Customers have changed the consumption behaviours. For example, they tend to avoid direct contact with others during the transaction. In this light, contactless payment has been widely accepted and adopted by the general public. According to The Global Payments Report 2021 conducted by Worldpay, Hong Kong’ s cash transactions accounted for 9% of the in-store consumption in 2020, resulting a year-on-year decrease of 17%. It is expected that the proportion of cash transactions will further drop to 1.6% in 2024, the lowest in the Asia-Pacific region. On the other hand, e-wallet will become the fastest-growing payment method and is expected to account for 36% of the total transaction volume in 2024, up 22% from 2020.


Contactless Payment

The most distinguishable feature of contactless payment is its PIN-free and signature-free payment method for transaction. There are three main forms of contactlesspayment, namely, Near - field Communication (NFC), Radio Frequency IDentification (RFID) and QR Code. The first one is done by storing the data of the credit or debit card in the mobile payment system or e-wallet and using NFC to perform data transfer between two electronic devices within a short distance. The second type is to embed the RFID technology into the credit or debit card. Customers simply tap the card on the card reader to complete the payment. Octopus Card is the perfect example of such type. The last method is to scan the QR codes for payment. Compared to the traditional payment method, these contactless payment methods are much more convenient, faster and safer.

First of all, contactless payment normally takes only 10-15 seconds for the entire transaction process, whereas the traditional integrated circuit card requires 30-40 seconds. It significantly reduces the time for transaction, which suits the rapid pace of modern life and enhances the work proficiency for the merchants. Moreover, the contactless payment method does not have minimum amount, which is convenient for customers to make small amount transactions.

Last but not least, every contactless transaction will provide the payment terminal a set of unique passwords, which works only once without saving any card holders’ personal particulars, which can better protect the holder’s privacy and reduce the risk of theft or fraudulence.


Promoting Popularisation of e-Payment

The Hong Kong Government has played a proactive role in promoting popularisation of e-payment. In November 2019, Hong Kong citizens can start to use Faster Payment System (FPS) to pay their government bills. In October 2020, the government launched the subsidy scheme for promotion of contactless payment in public markets, in which tenants of FEHD market stalls are offered a one-off subsidy at a flat rate of $5,000 for setting up contactless payment systems. With an increase in the quantity of e-payment systems and equipment, citizens are encouraged to adopt e-payment more frequently in their daily lives, with a view to changing their habitual behaviours from using cash for transactions. According to Budget 2021/22 announced earlier this year, the government is going to issue electronic consumption vouchers with a total value of $5,000 to eligible citizens. The scheme serves as an incentive that prompts the business to adopt contactless payment in order to improve their revenues. It also facilitates citizens’ motivation to apply e-payment and have a taste of the convenience brought by it. In the long term, the scheme helps popularise the use of e-payment in Hong Kong.


The Inevitable Advent of e-Payment

As Visa Consumer Payment Attitudes Study 2.0 shows, 63% of the respondents choose e-payment for small transactions (HKD$100-199), which sees a 7% increase compared to 2019. In addition, 41% of the respondents, which is greater than the number in 2019 by 8%, mention that they can use other payment means over cash for more than a week. It suggests that more and more Hong Kong people tend to adopt e-payment nowadays. Although some people in the society still hold a dubious attitude towards e-payment for its risk of personal data breach, or they just get used to using cash for transactions, there is a need for change for the sake of social progress, just like how electric lamp, microwave oven and automobile changed our human history by leading us to a more convenient life. We should not confine ourselves to the traditions and habits. Instead, we should step forward and keep up with the times. Partnered with HSBC, ISL has now introduced FPS’ payment function for its flagship product ReportNOW. It helps users save 3%-5% handling fee for each transaction. For more details, please read “ISL Spotlight” of this issue of newsletter, or contact us at +852 2263 6106 or enquiry@isl.com.hk.