Hong Kong’s MTR Corp. (00066.HK) is introducing QR code-based payments for travelling on the city’s railway and metro system, with AlipayHK selected as the service provider for an initial period.
According to an agreement signed between AlipayHK and MTR, QR code readers will be installed at entry gates at 91 MTR stations in Hong Kong by mid-2020.
The will give commuters the option of entering MTR stations by scanning the QR code on their smartphones via AlipayHK mobile app.
AlipayHK says the transaction via its QR code payments will be completed in under 0.4 seconds, comparable to that of Octopus, the city’s ubiquitous stored-value card.
In addition, AlipayHK’s QR code solution will support “dual offline” solution, so even if internet service is poor or lacking, transactions can be completed to ensure smooth journeys.
AlipayHK is a joint venture between Alibaba’s payments arm Ant Financial, and Hong Kong conglomerate CK Hutchison (00001.HK), which is owned by billionaire Li Ka-shing.
According to media reports, commuters using AlipayHK’s QR code payment will be charged when they exit at the destination station.
Only fare data will be collected by AlipayHK, without storing records on commuters’ ride details. Such arrangement will ease concerns related to users’ personal data and privacy.
AlipayHK will be responsible for designing and setting up QR code readers and system to be deployed in MTR’s entry gates. Other electronic payment platforms will be compatible with the QR code system.
After a 12-month exclusive right for AlipayHK, additional providers under the same tender will be added in mid-2021.
Alipay’s Chinese rival WeChat Pay, which is operated by social media and gaming giant Tencent Holdings (00700.HK), is believed to be among the entities that participated in the MTR tender.
Alipay and WeChat Pay have made Hong Kong a new battleground for mobile payments, after facing off in their home market in China.
In five years starting from 2022, MTR will add other payments options including contactless credit cards, introducing more competitors to Octopus.
Launched in 1997, the Octopus system — which is majority-owned by MTR Corp — has a virtual monopoly now in electronic payments on the city’s public transport networks.
Alipay and WeChat Pay have been seeking an opportunity to introduce alternative payment options in MTR’s railway system, in a bid to expand their reach in Hong Kong mass market.
Starting from December last year, commuters were given the option to purchase tickets with their smartphones via WeChat Pay at selected stations.
In a joint effort to turn Hong Kong into a cashless society, the Hong Kong Monetary Authority, the city’s de facto central bank, launched in October a so-called faster payment system (FPS) that will allow for real-time processing.
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