24 March 2019
More than 80 percent of Singapore consumers have adopted electronic payments, a senior government official said recently. Photo: Reuters
More than 80 percent of Singapore consumers have adopted electronic payments, a senior government official said recently. Photo: Reuters

HK vs Singapore: Who will be the digital payments leader?

With Singapore committed to becoming an electronic payments society under its fast-developing Smart Nation initiative and Chinese cities like Shanghai and Beijing strengthening their position as kings of the cashless revolution, we have often heard a refrain in the past year that Hong Kong has fallen behind its regional neighbors in terms of digital payment innovation.

However, the situation could be about to change as, in the coming months, Hong Kong is set to reassert itself as a major digital payments leader in Asia Pacific. With forward-looking support from policymakers and new offerings from enterprises, Hong Kong is now ready to be an engine of exciting new growth for convenient, technology-enabled payments innovations to lead consumers and businesses into the future of payments.

One major factor bolstering digital payments in Hong Kong is firm backing from the government. For example, Hong Kong has now awarded stored value facilities licenses to 13 companies and three banks; enabling institutions such as Alipay, PayPal and TNG Wallet to operate e-wallet services and give Hong Kong consumers a seamless and convenient way to pay online.

Indeed, e-wallets are soaring in popularity across APAC, and their potential in Hong Kong appears set to be unleashed as well. According to Worldpay’s Global Payments Report 2017, e-wallets and other alternative payments are cementing their place at the heart of online shopping in the region and rapidly stealing market share from more traditional methods like credit and debit cards. In Hong Kong, e-wallets are set to account for 28 percent of the online payments marketplace by 2021.

At the same time, soothsayers aren’t predicting the end of Singapore’s reign as a major digital payment leader in APAC – at least, not just yet. Singaporean banks, local payment networks, private enterprise and the government are working hand in hand to spread mobile payment systems and build a cashless ecosystem at speed.

In June, Singapore’s Education Minister and Monetary Authority board member Ong Ye Kung said that more than 80 percent of Singapore consumers have adopted electronic payments; noting that the government is aiming to become cheque-free by 2025.

This bold proposition is supported by Singapore consumers’ eagerness to try out e-payments, with surveys finding that around 87 percent of consumers prefer to use electronic payments – the highest anywhere in Asia. In his speech at the Association of Banks in Singapore’s 45th annual dinner in June, Ong Ye Kung also noted that around three in five merchants across Singapore now accept digital payments.

As anyone living or visiting Hong Kong knows, despite payment innovations from financial players and support from the government, day-to-day life is still very much dominated by cash. Go to a busy dumpling restaurant for lunch, hop in a cab or visit a beachside convenience store, and you’d better have enough cash in your wallet. In 2017, one report found that only 70 percent of Hongkongers had used mobile payments, as opposed to 82 percent in Singapore – despite Hong Kong’s sky-high mobile penetration rates.

What’s keeping Hong Kong hooked on cash? There are many potential explanations, ranging from Hongkongers being too busy to adopt new technologies (after all, the city does rack up the longest working hours anywhere in the world), to the city being home to a profusion of “old money” types who simply prefer to make their transactions in cash.

The future potential of digital payments in Hong Kong will no doubt be linked to innovations from both the government, and private business. At the end of 2017 the Hong Kong government unveiled its new Smart City Blueprint, covering a range of technology-led proposals including a strong focus on digital payments.

The Blueprint calls for the development of a Faster Payment System that will support electronic identities for Hong Kong residents to drive quick and secure online transactions. Other proposals include new parking meters that support multiple payment systems, such as remote payment via mobile applications, and new electronic payment options for public transportation – all making digital payments easier to use and more appealing for Hongkongers.

Business innovation also has an important role to play. Recently, a number of payment giants have engaged in healthy competition to win over Hong Kong consumers by expanding their footprint in the city. Alipay and WeChat Pay, China’s two biggest providers of mobile payments, are now involved in a trial MTR payment scheme to give travelers more options for purchasing public transport tickets.

As initiatives like these familiarize Hongkongers with new ways to pay, online merchants should ensure that their digital payment acceptance capabilities are keeping pace with the growing popularity of mobile payments and e-wallets in Hong Kong. This will be especially important as traditional financial institutions evaluate how to enhance their own innovation to stay relevant for Hong Kong consumers.

Norman Chan Tak-lam, Chief Executive of the Hong Kong Monetary Authority, has announced a range of initiatives to promote collaboration between banks and tech companies, in order to drive new smart banking opportunities in Hong Kong.

With government support and new enterprise investment, 2018 is shaping up to be a key year for digital payment front-runners to emerge in APAC. Will Hong Kong be a major force in driving the future of payments? The signs are certainly promising, and a healthy dose of rivalry between Singapore and Hong Kong will no doubt keep innovation moving along at a good clip.

– Contact us at [email protected]


General Manager, Global eCom, APAC at Worldpay

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