The history of using cards to replace cash as an alternative payment tool dates back to 1930 when some department stores and oil firms in the United States issued their proprietary cards. Bank-issued credit cards came later, taking off in the 1960s and becoming popular ever since.
Over the past decades, credit cards, which allow people to buy now and pay later, have proven to be a main catalyst for retail sales to keep rising.
Data compiled by Euromonitor International, a world leader in strategy research for consumer markets, show that different markets have developed different payment patterns in terms of usage percentages of cards and cash.
For the United States, the United Kingdom, Australia, Singapore and Hong Kong, no-cash payments had similar weightage, accounting for around 70 percent.
At the moment, Sweden and South Korea are the two most successful countries in the push for a cashless society. In Sweden, card payments have accounted for as high as 97 percent of total payments made in the country.
But as advanced as Sweden is in this regard, the Nordic country has never introduced payment tools such as Alipay that are hugely popular in China.
This suggests Hong Kong people can also go their own way and do well without the Chinese mobile payment systems.
In Hong Kong, about 20 million credit cards have been issued by local financial institutions, and more than 33 million Octopus cards are currently in circulation, making the two the most widely used payment tools in the city.
However, there have been calls during the past year that Hong Kong or even the entire world should learn from China and bring in the latter’s popular payment tools as soon as possible so that the city can be as successful in pushing for cashless consumption.
I don’t think such advocacy is justified, as Euromonitor data show non-cash consumption amount still accounts for only half of the total in China, which is not a big deal as a matter of fact and implies that non-cash payment platforms still needs further development.
To be sure, Hong Kong has already had a wide range of non-cash payment platforms as there are a total of 16 stored value facility licensees, based on data from the Hong Kong Monetary Authority.
Nonetheless, several local major retailers have recently ignored consumers’ interest by unilaterally changing the payment tools accepted at their stores.
I think the move, which clearly aims to force consumers to switch from the payment tools they have been using, is really unwise since consumers can either choose to pay cash instead or even go to other stores where there is no need to yield.
When it comes down to it, the best payment tool in consumers’ eye is the one that can truly offer them the greatest convenience.
This article appeared in the Hong Kong Economic Journal on Dec 11
Translation by Taka Liu
[Chinese version 中文版]
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