HONG KONG: For decades in the past, mainland China tourists came to Hong Kong for a taste of modern life. The city, a British colony until 1997, boasted taller buildings, faster cars and the latest fashion - the stuff of envy for mainland Chinese who lived in relative isolation.
These days however, a trip to Hong Kong can feel like traveling back in time.
One recent afternoon, a mother and son duo from mainland China stood outside a pharmacy in Causeway Bay, rooting through a coin purse to find the exact change they needed for a bottle of water.
“We haven’t used cash for quite some time. Back home, even hawkers accept Alipay or WeChat Pay,” the mother said, referring to two of China’s most popular e-payment platforms. “It’s a bit strange that, in Hong Kong, you still need to pay in cash.”
However, cash is not the only means of payment in the city. Hong Kong’s credit card penetration rate is the highest in Asia, at 2.5 per head. It also has the Octopus card. Launched in 1997 by the city’s transport operators, it was one of the world’s first contactless payment cards. Today, there are about 20 million Octopus cards in circulation - three times the city’s population - and is now widely used by small shops and eateries.
Yet, one cannot simply go about day-to-day life in Hong Kong without cash. Some restaurants still do not take anything else, and the city’s taxis - owned by individual medallion holders - still accept only cash.
And at Hong Kong’s famous computer malls, gadgets priced in the thousands of dollars are often purchased with wads of banknotes, so merchants and customers can split the savings from credit card fees.
A VICTIM OF ITS OWN SUCCESS?
In a way, Hong Kong is a victim of its own success. The city has never had a big problem with counterfeit banknotes, and its extensive ATM network meant that cash is readily available.
“People are generally content with how things are today. They are not feeling the pain of paying (in cash),” said Venetia Lee, the general manager for China’s e-payment giant Alipay’s Hong Kong office.
However, this does not mean that adopting e-payment is not important to the city. For one, the technology is cheaper to deploy and when done right, arguably more secure than credit cards and Octopus cards.
It also generates a huge amount of consumer data, crucial to building a smart city that can adjust electricity supply according to demand and redirect buses to where they are needed.
E-PAYMENT FIRMS HAVE TO ADAPT
Hong Kong's cash culture has forced local e-payment firms, like startup TNG, to think of creative ways to sell their services.
“There’s little reason for a society like Hong Kong to become cashless, because of the ease and convenience. Where there is a need is in fintech, like remitting money overseas,” said Alex Kong, founder and CEO of TNG.
Launched two years ago, TNG has signed up 2,000 merchants and 630,000 users. Now its focus is on the city’s 400,000 foreign domestic workers, with services to help them remit money back home and pay bills in countries like Indonesia and the Philippines.
This niche has helped TNG avoid a head-on competition with Chinese payment giants Alipay and WeChat Pay, both of which have seen some success in Hong Kong.
They are well received by waves of mainland China tourists coming down south and both have been trying to sign up locals too.
Alipay’s Lee said that her company’s role in Hong Kong is more a "lifestyle application" rather than a payment tool.
But she still wants to help people in Hong Kong avoid hassles such as standing in the pouring rain trying to flag down a taxi, and then looking in their wallets to pay for their fare.
“That’s painful, right?” Lee said. But she recognises that this will be a slow process. “We are working on it,” she said, putting forward no timetable.
After all, Hong Kong’s taxi fleet has buried similar attempts by both Octopus and TNG to provide e-payment options for customers.