A cashless economy is fast catching up with businesspeople and travelers worldwide. For Hong Kong people making regular trips to the Chinese mainland, the matter is of particular concern to them as online and mobile payments are already ubiquitous nationwide. Chai Hua reports from Hong Kong.
Andy Chong is dead set on not taking chances. He embarked on a grueling exercise this month when he set off on a business trip to Beijing, thoroughly researching and scrutinizing various mobile payment tools that are used and accepted on the Chinese mainland.
Worries about being unable to make payments, not using the right payment methods, and having to equip his smartphone with the relevant apps loomed large in his mind. These are some of the most critical matters Hong Kong people have to deal with when heading north.
The e-CNY wallet card is not a transitional or compromised solution. On the contrary, it could become the preferred choice for small-value payments in the long term.
Wang Haiwei, head of e-CNY projects at the Shenzhen branch of Bank of China
Even with all the preparations, Chong recalls encountering problems as soon as he got off an airplane on the mainland. A self-vending machine failed to recognize his Hong Kong travel document, let alone accept payment, when he tried to purchase an Airport Express ticket for a ride downtown.
“Luckily, a ticketing clerk advised me to pay in cash. For the next few days, my AlipayHK app worked smoothly at most places, including shops and restaurants, although, on some occasions, I still had to pay in cash,” he says.
“I would advise other Hong Kong travelers to the mainland to familiarize themselves first with how to make digital or mobile payments there, especially in using public transportation.”
A cashless economy and society based on widely adopted digital payments in China has amazed the world, but it could be a headache for overseas visitors in view of the lack of direct access to such services.
The best way to travel around the country without any hindrance is to open mainland accounts on third-party digital payment platforms, which require users to have a bank debit card issued on the mainland and a local phone number registered under their own names. They have to apply for them personally at a bank and a telecommunication service provider shop on the mainland.
To help travelers, some Hong Kong banks have launched a new service that allows them to apply for bank cards through a “witness service” in the special administrative region. But, this often takes more than a week, and a phone number that can receive short messages on the mainland is still essential.
With the full resumption of normal travel between the SAR and the mainland, bilateral personnel exchanges have accelerated, along with the need for electronic cross-boundary payment tools. To deal with the pressing problem, many market players offer various solutions for Hong Kong residents, avoiding the inconvenience of opening payment accounts on the mainland.
However, they’re still tough nuts to crack. The solutions aren’t comprehensive enough, and are fragmented and concentrated on merchandise consumption in the Guangdong-Hong Kong-Macao Greater Bay Area. Hong Kong travelers still have to worry about whether their QR codes will be accepted each time they make a transaction on the mainland. Industry pundits believe that payment tools with more functions — ranging from purchasing transportation tickets to paying for public service fees, and covering more numerous locations — are urgently called for.
Wang Haiwei, head of e-CNY projects at the Shenzhen branch of Bank of China. (PHOTO PROVIDED TO CHINA DAILY)
Cards are coming
The CNY wallet card — a new cross-boundary payment channel — was jointly launched in Shenzhen, Guangdong province, in late February by the city’s Luohu district government, the Shenzhen branch of Bank of China and Octopus Cards Ltd, which operates Hong Kong’s most-popular stored value smart card.
The CNY wallet card provides an extra option for Hong Kong residents in making cross-boundary payments. It accepts Hong Kong travel permits in registering for the card, and enables Octopus app accounts to top up for the first time. In making payments, it’s simple and convenient — tapping a payment terminal without requiring a mobile-phone or internet connection, just like paying with an Octopus card, which Hong Kong people are used to doing.
Wang Haiwei, head of e-CNY projects at the Shenzhen branch of Bank of China, said the e-CNY wallet card offers an ideal solution in making cross-boundary payments, especially small-value payments by visitors who don’t have a mobile-phone app on the mainland.
Asked about the need for such a service, Wang said local governments on the mainland are keen to stimulate consumption and boost economic growth. “Although vouchers have proved to be an effective means of stimulating consumption, it isn’t easy to come up with an ideal solution by issuing vouchers for overseas visitors due to the lack of a unified payment tool with identity authentication and its dependence on a mobile network.”
“The e-CNY wallet card is welcomed by governments in issuing vouchers because it can meet the two requirements mentioned and, more importantly, subsidies are handed out directly to inbound visitors,” says Wang.
For instance, the Luohu district authorities have rolled out a 200-yuan ($28.86) government subsidy for each Hong Kong e-CNY card user to stimulate consumption.
Venetia Lee, general manager of Ant Group Greater China International Business. (PHOTO PROVIDED TO CHINA DAILY)
In addition, e-CNY cardholders don’t have to worry about their consumption data being obtained and reused for big data-based commercial analysis purposes, Wang said.
“Considering these advantages, the e-CNY wallet card is not a transitional or compromised solution. On the contrary, it could become the preferred choice for small-value payments in the long term,” says Wang. “More than 5,000 Hong Kong people have obtained digital renminbi consumption cards by Wednesday, and other district authorities have approached us to install self-service e-CNY card issuance machines.”
E-CNY wallet cards are now accepted at more than 1,500 business venues on the mainland, including convenience stores, shopping malls, cinemas and hotels, and the list is growing.
The Hong Kong Monetary Authority has teamed up with the nation’s Digital Currency Institute in conducting technical tests on cross-boundary use of the e-CNY app. The tests have entered the second phase, focusing on using the SAR’s Faster Payment System to top up e-CNY wallets. Cross-boundary use of the e-CNY will increase financial connectivity in the Greater Bay Area and improve the efficiency and user experience of making cross-boundary payments.
The challenge, Wang points out, is that the issuance and promotion of physical cards require time and constant input. So, it’s difficult to see the effect in the short term.
Wu Haifeng, director of the fintech research center at the Shenzhen Finance Institute, agreed that the wide application of digital renminbi cards on the mainland is a prerequisite for its popularity among Hong Kong visitors.
Wu Haifeng, director of the fintech research center at the Shenzhen Finance Institute. (PHOTO PROVIDED TO CHINA DAILY)
All-inclusive e-wallets
He believes that digital payment is still the best solution, and the use of all types of Hong Kong e-wallets should be expanded as soon as possible as they’re not all-inclusive at present.
According to a report released by the central bank last year, five cross-boundary electronic wallets from the Hong Kong and Macao SARs had accumulated about 9.26 million transactions on the mainland worth HK$1.5 billion ($191 million) by the end of 2021. It said the People’s Bank of China has continued to promote financial reform and innovation concerning Hong Kong people’s livelihoods on the mainland.
The central government has repeatedly pledged in national policy documents to make it more convenient for Hong Kong people to make payments in traveling, living and working in the Greater Bay Area, so there won’t be any financial supervision barrier, says Wu.
But what worries Wu is that many Hong Kong consumers are used to paying for goods and services with cash and credit cards instead of digital widgets.
But, the situation has improved in recent years with local usage of digital tools also surging in Hong Kong. AlipayHK and WeChat Pay HK have been making it easier for people to go about their lives, with mainland merchants beginning to accept payments with Hong Kong e-wallets in 2018. Hong Kong users no longer need to link their accounts with a mainland bank in making cross-boundary payments, and currencies are converted automatically.
At present, mainland merchants are not required to pay an extra fee before linking up with e-wallet platforms, and handling fees are waived for all transactions.
According to a survey report published on March 14 by the Hong Kong Institute for Monetary and Financial Research — the research arm of the Hong Kong Academy of Finance — nearly 70 percent of respondents agreed that e-wallets play an important role in facilitating cross-boundary activities. Some of those polled said customers could use the cross-boundary e-wallet services previously launched to settle cross-boundary payments conveniently.
Almost all mainland merchants listed on Alipay are entitled to accept AlipayHK payments now, says Venetia Lee, general manager of Ant Group Greater China International Business.
With the resumption of normal cross-boundary travel in January this year, the number of AlipayHK transactions by Hong Kong users on the mainland had jumped 1,800 percent during the first three days of the Lunar New Year holidays, according to Lee.
Ticketing issues
However, purchasing tickets for public transport remains a herculean task as each mainland city has its own unique QR code system for public transport, and even mainland Alipay and WeChat Pay QR codes can’t be scanned directly when using public transport systems. The systems have yet to be mutually recognized in most places, and third-party mobile payment platforms have to negotiate with the operators at each location separately.
According to Lee, AlipayHK will focus on expanding its use on transportation networks on the mainland and cover more government, livelihood and welfare services in its e-wallet app.
Following the resumption of normal travel between the mainland and Hong Kong on Jan 8, AlipayHK has been linked to the Shenzhen MTR, and its customized QR codes can also be used on buses in Guangzhou, Foshan and Zhongshan in Guangdong.
“We hope to focus on opening up the public transport network in the Greater Bay Area before gradually expanding the service to all cities on the mainland,” says Lee.
The UnionPay Mobile QuickPass app can also be used to support Hong Kong accounts in paying for rides on buses and the metro in more than 100 mainland cities, according to its official website.
Octopus Holdings — Hong Kong’s homegrown cashless payment provider — is also jumping on the bandwagon. It plans to launch a new transit card that can be used for bus and metro rides in about 300 mainland cities in the second quarter of this year. All payments will be automatically settled in Hong Kong dollars.
The Octopus card can be used to pay for a range of products and services in Hong Kong, including public transport, hotel accommodation, hospital fees, and groceries. There are now more than 20 million active Octopus cards in Hong Kong, far exceeding the city’s population of 7.66 million.
According to the Wen Wei Po newspaper, Octopus cardholders can make purchases at local or overseas shops that support UnionPay by scanning the UnionPay QR code.
Since the resumption of normal cross-boundary travel, usage of the Octopus app has gone up fivefold. One of its advantages is that customers do not need to link the card with a mainland mobile-phone number or bank account.
Contact the writer at grace@chinadailyhk.com