18 August 2019
Apple CEO Tim Cook predicts mobile payment will soon replace plastic money as a mode of cashless transaction. Photo: Bloomberg
Apple CEO Tim Cook predicts mobile payment will soon replace plastic money as a mode of cashless transaction. Photo: Bloomberg

Will Apple Pay become wallet killer in Hong Kong?

Apple’s chief executive Tim Cook said on Thursday its mobile payment service Apple Pay will be officially launched on Monday. He predicted that the new technology will soon replace plastic money as a mode of cashless transaction.

But will the mobile payment trend gain traction in Hong Kong?

Peer-to-peer or mobile payments have yet to catch on in Hong Kong, putting the city way behind mainland China in this area.

Mainland users can pay for goods and service as well as transfer money with just a few clicks on their mobile phones through the payment platforms provided by Alibaba and Tencent, two of the largest mobile payment service providers in China.

In Hong Kong, people still transfer money to other accounts chiefly through banks or physical credit and debit cards.

Security is believed to be the main obstacle for new technology to take root in the territory.

Addressing such concern, Apple Pay provides a new level of security by incorporating a fingerprint authorization function. The system needs to verify the user’s fingerprint for a transaction to be completed.

Apple Pay replaces the traditional credit card by letting consumers load card data onto their smartphones. Consumers can then pay for purchases at the cash register just by holding their finger on their TouchID and tapping the phone on the terminal.

The drawback is that a user’s credit card information is saved into the phone for Apple Pay to work. This brings the risk of private data, including the user’s password, being stolen by a hacker.

Regulatory approval is another potential hurdle. The Hong Kong Monetary Authority earlier said it did not possess enough information about Apple Pay to assess whether merchants need its authorization before providing such service.

To accommodate Apple Pay’s new security technology, banks need to upgrade their credit card and verification systems. Other than that, they have to replace nearly 15,000 credit card terminals installed in their clients’ stores. Both are going to take time.

Apple Pay may become a wallet killer in United States, said Chen Xijian, senior vice president for information security at Hong Kong-listed Tradelink Electronic Commerce. However, he said it won’t happen so fast in Hong Kong.

Upgrading the payment system and hardware takes money and time. In Hong Kong, banks and card issuers were not enthusiastic in promoting the mobile payment before as the city is a much smaller market than the US or China. This could explain why Hong Kong was left behind in this area.

Cultivation of a new consumer payment habit could also pose a challenge. One thing going for Apple Pay is that it adopts the near field communication (NFC) technology used in Hong Kong’s Octopus and Visa payWave cards.

At the end of the day, security concerns would probably be the number one factor that will determine the pace of acceptance by locals of the mobile payment system.

Think of it this way: If you stick to your cash and credit cards, you can lose them all if your wallet is stolen. The risk is always there, whichever system you choose.

Paying through smartphones would probably become a part of daily life. It is only a matter of time.

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EJ Insight writer

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