Mobile payment is gaining ground fast in many cities but Hong Kong is an exception.
In China, a handful of cities such as Hangzhou have been in transition to cashless societies, and the country’s dominant Alipay has been expanding in 28 foreign countries including Japan. However, Hong Kong, the financial powerhouse of the region, is oddly lagging when it comes to mobile payment.
In response to calls for financial innovation, the local banking regulator, the Hong Kong Monetary Authority (HKMA), granted stored value facilities (SVF) licenses to 13 mobile e-wallet service providers last year.
According to the HKMA, in the first quarter of 2017, the total number of transactions by SVF was 1.35 billion, a 3.7 percent quarter on quarter fall, with the transaction value at HK$29.4 billion, down 1 percent.
“It’s like the government has granted 13 franchised companies to operate bus services. It is a complete chaos,” said Emil Chan, chairman of the Smart City Consortium Fintech Committee.
Accounts in different SVFs are not interoperable; functionalities such as instant money transfer and money refill are not as fuss-free as touted. With varied properties and functions among SVFs, both customers and retailers are bewildered.
“The confusion in usage annoys users, so they just turn away from it,” according to Chan, who blamed the government for the city’s slow progress in adopting cashless payments.
Another reason for the stalling mobile payment acceptance in the city is the considerable monetary and non-monetary costs that have caused some retailers to step back.
Wong, the owner of a hotpot restaurant chain in Hong Kong, had a trial of the WeChat Pay mobile service in his restaurant in Tsim Sha Tsui last year in order to attract mainland tourists. He found the payment procedure troublesome, and the employees shunned it so as to avoid extra administrative work.
“Each mobile payment terminal costs an annual rental fee of HK$1,200 and we need to pay a 1.3 percent transaction fee per mobile payment transaction,” Wong said. Assuming the monthly revenue of a restaurant is about HK$2 million with half of the revenue from customers paying via WeChat Pay, the transaction fee alone would cost HK$13,000, which is about the monthly salary of a regular staff.
In actual practice, Chan said that for every mobile payment transaction, the cashier needs to input the transaction to the cash register separately for accounting entry. In addition, the accounting staff needs to pay extra effort to check with the mobile payment statements every time to match the transactions when he prepares regular financial statements. Staff is baffled and overwhelmed in handling various mobile payment tools.
Chan doubts if mobile payment service can really benefit retailers. “Workers in the catering industry are normally from the grassroots. A total of 13 e-wallet services are just too confusing for them. If they are displeased by these complicated mobile payment tools and quit the job, how can I recruit new staff?”
He added: “Can [mobile payment tools] really enhance earnings? Who can tell?”
This article appeared in the Hong Kong Economic Journal on Aug. 21
Translation by Ben Ng
[Chinese version 中文版]
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