The Hong Kong Monetary Authority (HKMA), the de facto central bank, has recently unveiled the Faster Payment System (FPS).
The system, operated by Hong Kong Interbank Clearing Limited, allows instant money transfers and bill payments via the mobile phone, regardless of the bank or e-wallet that is being used.
The platform started accepting registrations from Sept. 17. To date, 21 banks and 10 digital wallet operators have signed up for the system, including all HSBC, Citibank, Bank of China (Hong Kong), TNG Wallet, Alipay, WeChat Pay, and the city’s ubiquitous payment card Octopus.
Emil Chan Ka-ho, who chairs the FinTech Committee of the Smart City Consortium, recently sat down with the Hong Kong Economic Journal to share his thoughts on how FPS can turn the city into a cashless society.
HKEJ: The government claims that the FPS is the world’s first to operate on a round-the-clock basis and connect banks and stored-value facility (SVF) operators, including mobile e-wallet service providers, on the same platform. What are your thoughts on this new service?
Chan: About ten years ago, the UK has launched the Faster Payments service. In 2014, the Fast And Secure Transfers (FAST) service went live in Singapore. They are all platforms providing real-time cross-bank payment or transfer services, anytime. As for Hong Kong’s FPS, it adds a new feature that allows cross-storage payment transfer service which covers e-wallets.
Q: What benefits can the FPS bring to merchants and investors in the city?
A: Without the FPS, small and medium-sized enterprises may find it complicated to handle payments from online channels. They can complete the transaction within the banking system, such as by using electronic cheques, but the process takes two days.
On the other hand, for those with credit card accounts, they can also handle the payment with the account. However, the cost is high, considering the transaction fees and annual fees.
Now, with the FPS, SMEs can make cross-bank, real-time payment transfers. This enhances transaction efficiency, while reducing the risks from banks, SMEs and customers. Besides, transaction fees are waived for transactions through the FPS from now to March next year.
In addition, the FPS provides the user with a receipt showing detailed information about the transaction, including the receiving party and the payment amount, which makes the transaction history accurate and traceable.
Q: As we can see, the platforms of banks and e-wallet operators have different interfaces and features. How would the market landscape be changed?
A: As far as I know, users now can top-up and pay with their accounts in the banks registered in the FPS through Alipay Hong Kong, an e-wallet platform. This feature serves a leading role in the upcoming development of the financial sector in the city.
The FPS has established a foundation for cross-bank payment transfers in Hong Kong, and new service offerings, such as remote account opening and virtual banking, are getting better.
I think that as long as the foundation is well done, the next step for the industry can be to develop cross-border and cross-currency services, and to share information with the banking system.
Q: Some see the FPS is turning Hong Kong into a cashless society. Do you also think so? And how should businesses in the city embrace the new era?
A: Countries around the world are actively pushing “cashless city” initiatives. If businesses still stick to the traditional practice and reject innovation, they will be caught off guard when fewer and fewer people will be using cash.
Money is a necessity, but for the form of money, it has been changed from cash to electronic money in payment systems, and the payment service is extending. While Octopus and other offline e-wallet services have been running in Hong Kong for decades, they still have to spend some efforts on their online services.
This article appeared in the Hong Kong Economic Journal on Oct 5
Translation by Ben Ng
[Chinese version 中文版]
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