Hong Kong’s Productivity Council releases inaugural AlipayHK Smart Payment Popularity Index

To collect data on how non-cash payment methods appeal to the Hong Kong population the Hong Kong Productivity Council (HKPC), in partnership with Alipay Payment Services (HK), conducted a nation-wide survey. HKPC announced the release of the inaugural “AlipayHK Smart Payment Popularity Index”, which reports an Overall Index at 53.9 (maximum being 100) – indicating that the concept of "smart payment" is gradually taking root in Hong Kong.

Comprising the “Retailer Smart Payment Readiness Level” and the “Consumer Smart Payment Acceptance Level”, the Index aims to evaluate the popularity of smart payment in Hong Kong from the perspectives of both retailers and consumers. In this survey, telephone interviews with 428 retailers and 1,049 Hong Kong residents aged between 15 and 64 were conducted between May and June 2018.

The “Retailer Smart Payment Readiness Level” was reported to be at 62.2. Amongst the four component sub-indices, “Retailers’ knowledge and perceptions towards the smart payment market” (73.3) sub-index is the highest. Amongst the surveyed types of retail outlets, the readiness level of “Jewellery, watches, and clocks, and valuable gifts” (73.7) ranked the highest.

More than 90% of the surveyed retailers provide non-cash payment channels, with credit card (81%) being the most popular channel, followed by mobile payment (43%). They provide mobile payment mainly to “satisfy customers’ needs” (91%). Around 60% of surveyed retailers have not yet provided mobile payment mainly due to “estimated low demand from customers”.

On the other hand, the “Consumer Smart Payment Acceptance Level” reported a slightly-lower-than-expected reading of 45.5. Only the sub-indices for consumers’ “willingness to adopt smart payment” (56.0) and “knowledge and perceptions towards the smart payment market” (55.6) are above the 50-mark. In term of age group, citizens aged “25-34” were most receptive to the notion of smart payment (57.1), whereas the “50-64” age group (32.2) was least receptive.

About 30% of the surveyed members of the public had mobile payment experience while 14% plan to adopt mobile payment, with “quick transaction” (55%) the major reason for its usage. In contrast, the key hindrances to its wider use include “unfamiliarity with the operation” (68%) and “worries of personal data leakage” (55%). To boost mobile payment adoption in Hong Kong, most respondents felt “increasing the number of locations/shops that accept mobile payment” (64%) to be the most important.

Ms Jennifer Tan, CEO of Alipay Payment Services (HK) Limited stated that the AlipayHK Smart Payment Popularity Index is Hong Kong’s first credible comprehensive investigation and that the biggest outcome learned was that Hong Kong is gradually becoming a Smart City. According to the study, over the past year, 20% of Hong Kong citizens ‘frequently’ or ‘sometimes’ purchased through mobile payment. Given the current user base of 1.5 million citizens, Ms Tan stated that the Alipay team was glad to find that users are part of the main driving force in mobile payment. The survey also found that a lack of understanding towards in-app operation strongly influenced non-usage.

The survey also studied the payment ecosystem in Hong Kong in the past year. The results revealed that cash was still the most frequently used payment method (99%), while mobile payment only accounted for 20%.

According to Mr Wilson Wong, General Manager (Information Technology) of HKPC, the survey found that while members of the public are generally willing to make payments using non-cash methods, most still prefer the traditional payment means. He noted that the reluctance to embrace new payment methods might stem from unfamiliarity with their operation and fears of data leakage. On the other hand, the low demand for new payment tools has been misconstrued to mean that customers do not want new payment tools. This has deterred retailers from investing thus hindering the development of Hong Kong as a Smart City.

Mr Wong stated that, in truth, the barriers for entry for some of the mobile payment models openly available are relatively low which retailers should make use of to provide their customers with another payment method while building a firm digital foundation in preparation for e-commerce and m-commerce.

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