Why HK can expect Apple Pay support for Octopus card

June 27, 2019 14:41
Hong Kong's Octopus card could find a place in Apple's mobile payments system when iOS13 is launched in the fall, reports suggest. Photo: Bloomberg

Hong Kong people could soon be able to use link up their Octopus cards with Apple's mobile wallet system, allowing them added convenience in paying for a host of daily needs ranging from public transport to grocery shopping.

Reports suggest that Apple Pay will support Hong Kong’s most popular electronic payment card in the upcoming version of Apple's mobile operating system, a move that will enable iPhone users to put away their physical Octopus cards and solely use the smartphone for payments. 

According to tech news websites, as Apple started a public beta trial for its iOS 13 operating system, code has been detected that indicates that Octopus support could be coming to Apple Pay, 

Earlier there had been rumors that Octopus Cards Ltd, which operates Hong Hong's widely-used contactless stored-value electronic payment cards, was in discussions with Apple over inclusion of Octopus in Apple Pay wallet.

According to experts, source code has been spotted in Apple's software that indicated that the two firms may have been working to jointly to launch the service.

Octopus Card is considered a must-have for people living and travelling in Hong Kong. It can be used to pay for all modes of public transport as well as to settle payments in retail outlets such as convenience stores, fast-food joints and supermarkets.

But people need to top-up the card by cash or by direct debit arrangement with credit card or bank account to ensure the card has sufficient funding for payment.

Octopus has been exploring new technology in a bid to make it more convenient for users in the mobile era. It has partnered with a local operator to launch Octopus SIM card to enable smartphone users to pay with their phone. However, the penetration has not been very high as the feature was limited to a small number of Android smartphones.

Last year, Octopus partnered with Samsung to launch Smart Octopus service, which marked the first virtual Octopus card where users could use it by simply swiping their Samsung smartphones over a sensor.

Samsung has been pushing the service aggressively by giving away up to HK$500 cash rebate to Smart Octopus users to boost the user number. However, there was a problem as Smart Octopus users were required to pay a service charge to top-up their Octopus through Samsung Pay wallet. Many people were put off by the service charge.

Returning to Apple, it remains to be seen how the US tech giant and Octopus will launch the Apple Pay Octopus service in Hong Kong. But based on the overseas experience, it is likely that the Octopus Card could be added under Apple’s Express Transit feature.

Express Transit allows a person to use Apple Pay without requiring authentication like Touch ID or Face ID. This means users can make instant transactions at transit gates and terminals just by tapping the smart mobile device. That would make for quicker entry and exit at public transport facilities.

Express Transit continues to work even when iPhones have dropped into reserve power mode. The system is currently available in Japan, Beijing, Shanghai and parts of New York City, as Apple-focused tech news platform 9to5mac.com noted.

Octopus Card, as things stand now, faces the risk of becoming an outdated product for public transport payment in near future, as MTR will begin accepting QR code payment starting from next year and the rail operator will also add more contactless payment systems on its gates in future. For commuters, Octopus Card will no longer be the only choice for MTR payments.

In this scenario, Octopus could do with all the support it can to prevent an erosion in its business. Hence, backing from Apple in the form of inclusion in the iPhone wallet will be most welcome. 

From MTR's perspective, making Octopus Card available in Apple Pay wallet can streamline its ticketing procedure as people can take a ride by using their iPhone, helping further bring down transactions conducted via ticketing machines.

That should help the rail firm cut its daily operating costs in the next decade. MTR can also sell monthly or day passes to passengers directly through mobile phones.

Coming back to Octopus, it is becoming clear that it needs a new business model to maintain its market-leading position. Using a specific card for payment is no longer a modern way of payment. The core issue for Octopus is transform into something bigger, moving beyond the current payment functions and offer a lot more, perhaps even a mobile banking service, to retain users.

Incorporating Octopus into Apple Pay will be a good move, but that alone won't be enough. Leaving aside long-term strategic business transformation, Octopus could also do with some near-term improvements in its payments infrastructure and service.

Integrating its e-wallet O! ePay and the Octopus account into a single service in order to allow users to top up the card without additional procedures will be one good move the company can make.

Octopus may be dominating the payments scene in Hong Kong right now, but it cannot afford to take its position for granted as other platforms seek to catch up.

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EJ Insight writer