Often described as the financial capital of Asia, Hong Kong has fallen behind its mainland counterparts in implementing cashless payment systems. Jack Ma has even critiqued: “What is lacking in Hong Kong is the spirit of innovation, which regrettably stands in the way of the city realising its goal of becoming Asia’s financial centre.”
This dearth of “innovation” has left space for Ma’s company to move in. Alibaba’s payment firm Alipay launched a Hong Kong service, called AlipayHK, earlier this year. The localised version runs in Cantonese and, of course, allows users to connect local bank cards to their Alipay accounts.
Rather surprisingly, AlipayHK does not have an English-language option. Perhaps that’s because non-Cantonese speaking residents are viewed as less likely to shop online at Alibaba’s e-commerce services Taobao and Tmall.
So what’s significant about AlipayHK? When it was first released, it must be said, perhaps not a lot. The app has less functionality than its mainland counterpart, which allows patrons to book movie tickets or taxis within the app. But late last month Alibaba’s Ant Financial and CK Hutchison, the conglomerate controlled by Hong Kong’s richest man Li Ka-shing, signed an agreement to develop a JV that will take over the AlipayHK app, and boost its range of services.
The partnership is expected to come into full force by the end of the year, when Alipay will be accepted in all of CK Hutchison’s 600 Hong Kong retail stores, such as supermarket Park’n’Shop and pharmacy Watsons.
Once the required payments system is installed, it will also provide mainland tourists with more places to pay with their Alipay accounts too.
For the Hong Kong market the JV will also bring new services to users through the app, such as bill payment and a reward scheme (Hutchison’s large customer base also includes subscribers to its mobile network).
The partnership is also likely to be the icing on the cake for Ant Financial’s proposed IPO, especially if it happens in Hong Kong. Ant is valued at $60 billion but its listing plan has reportedly been pushed back to late 2018 because of regulatory issues.
(Alibaba opted to go public in New York in 2014 after Hong Kong’s financial regulators rejected the Chinese internet giant’s request for a dual-class shareholding structure.)
However CK Hutchison isn’t the first local firm that Ant Financial has struck a deal with.
According to the South China Morning Post, a number of retailers have already signed “exclusive partnership” deals to use AlipayHK, which partly explains why rival WeChat’s mobile payment system has been less successful in the Hong Kong market.
Another reason for WeChat Pay’s relatively minor uptake is perhaps explained by lifestyle differences between mainland China and Hong Kong. WeChat’s messaging service is not as ubiquitous in the former British colony, where alternatives such as WhatsApp and Facebook are available to rival Tencent’s social media platform.
Moreover, consumers are more accustomed to pay with plastic cards, including the city’s widely accepted Octopus card.
Launched in 1997, the Octopus card was one of the world’s first rechargeable contactless payment products. It was designed for use on the city’s subway system, but has grown its footprint and is now widely used in shops. Norman Chan, chief executive of the territory’s quasi central bank the Hong Kong Monetary Authority (HKMA), told the SCMP there are 14 million transactions made with Octopus cards each day.
“Hong Kong is slow off the blocks when developing person-to-person payment systems,” Chan said in a radio show last month. “But if you talk about cashless payment systems, we are not lagging behind”.
Last week the HKMA confirmed that a Faster Payment System (FPS) will be introduced next September which, according to the SCMP, will enable real-time transfer between banks as well as digital payment accounts such as Alipay and WeChat Pay. “From my understanding this is world-leading, if not the world’s first,” the central banker affirmed, rebuffing Jack Ma’s view that the city doesn’t innovate.
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