As Hong Kong increasingly integrates with mainland China, any policy changes there could have an enormous impact on the city.
The country has introduced a regulation requiring real-name registration for online payments.
All online payment accounts, including those with Alipay, must now be linked with an account at a mainland bank.
There are more than 1.4 million users of the Taobao e-commerce site in Hong Kong, and most of them don’t have bank accounts in the mainland.
If they fail to fix the problem by Friday, they may not be able to use Taobao for online shopping any longer — and could even lose the balance in their Alipay accounts.
Alipay is one of China’s most popular online payment systems, and it has more than 800 million registered users.
Mainland users now need to go to a bank, fill in several forms and provide identification documents.
It’s far more painful for Alipay users outside China, since most do not have mainland bank cards.
However, Alipay as an online payment platform is obliged to comply with the new government policy and basically can do nothing about it.
In fact, Alipay has suggested to users in Hong Kong that, if they can’t link their account to a mainland bank account, they should use up the amount left in the account before May 20.
Ant Financial Services Group, the company that runs Alipay, did not disclose what will happen if users do not use up the remaining amount before the deadline.
Some believe that the cash balances may be frozen for a period and that users will have to go through a lengthy process to get them back.
As a result, many of my friends in Hong Kong are asking how to open a bank account in Shenzhen.
Some banks require them to provide a mainland address and contact numbers.
Even then, it may take at least a week, and they may miss the deadline.
Others are just trying to use up the amount in their accounts before the deadline.
Certainly, users in Hong Kong can use alternative methods to make payment on Taobao, including credit cards and Octopus accounts.
The difference is that they will need to pay a handling fee of 1.5-3 percent, while there is no such charge if they use Alipay.
So, the new rule may hold back more than a million users of Taobao in the city, as well as its customers overseas.
In fact, real-name registration for online payments is a worldwide trend, and it’s quite sensible for China to follow suit.
However, Hongkongers have been faced with a dilemma, as many depend heavily on online shopping and payment services provided by mainland companies.
Let’s wait and see what will happen.
This article appeared in the Hong Kong Economic Journal on May 17.
Translation by Julie Zhu
[Chinese version 中文版]
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