Giants of e-payment follow customers abroad

Alex Kong, founder and chief executive of TNG, hopes Hong Kong will catch golden opportunities from the digital payment trend. Provided to China Daily

For years, the Chinese mainland's twin pillars of digital payment — billionaire Jack Ma Yun's Alipay and Tencent's Wechat Pay — have been branching out worldwide to chase the more than 130 million big-spending mainland holidaymakers who have become a common sight across the globe, including Hong Kong.

But more importantly Hong Kong consumers and retailers also started to join the fray in a more proactive manner this year.

On the mainland, which has led the development of mobile phone payment technology and applications, people are already accustomed to paying for everything with smartphones — from big supermarkets to night-market vendors.

Now they could keep that habit abroad as mainland mobile-payment service providers expand to international destinations. Payments are much more complicated abroad because of currency exchange, so digital solutions are welcome.

Mainland customers now need only pay through their own digital renminbi-account with WeChat Pay or Alipay, and then Hong Kong sellers will automatically receive payment in Hong Kong dollars, converted on real-time exchange rate at the Bank of China.

As many as 8,000 retailers in Hong Kong now accept Alipay's standard yuan-based transaction app, while WeChat Pay is available in Sasa, Bonjour Cosmetics, Chow Tai Fook, Broadway Electronics and 900 7-Eleven convenience stores in the metropolis.

Customers are not the only beneficiaries of the payment method — retailers also gain.

Store owners can make operating analysis based on data reported by WeChat, including sales volume, number of old and new clients, payment's time distribution and average spending.

In addition, customers can also choose to become members of shops' WeChat public accounts and receive promotion information.

Watsons says its mainland branches attracted one million new members through the tool in nine months;the proportion of sales to members increased from 30 percent to 60 percent.

Rebecca Wong, PwC China tax partner of consumer goods and retail industry, believes Hong Kong retailers' rent and labor costs are high so they must find new solutions to increase operating efficiency, but still need some time for mobile payment to become a mainstream method in the city.

"Because the motive for Hong Kong people to change from the prevailing credit-card and smart cards is not high, plus local people have concerns about private data security," she explained.

But Alipay went the extra mile to localize its payment-by-smartphone for Hong Kong users in May, with the maiden version of Alipay in a local currency. More than 2,000 brick-and-mortar stores such as Watsons, Fortress, Chow Tai Fook, Sasa, Ocean Park as well as food search engine Open Rice came on board from the very start.

"The story of digital payments in Hong Kong should not simply dwell on prospects of serving the tech-savvy mainland tourists. Instead, local consumers are hitting the road to embrace the new technology, which could boost the momentums of the city's digital payment platforms," said Lee Ying-ho, co-founder of Beijing-based e-payment startup QFPay, a long-time partner with Alipay.

"Digital payment platforms are always far more than digital payment itself. If we just confine ourselves to payment functions, is there any difference from integrating Octopus Card, with which Hong Kong has long taken pride for its once-pioneering application of e-money, into the smartphones?" asked Lee.

For payments, Hong Kong may remain on track to catch up with its regional counterparts, while for a wealth of additional functions like taxi hailing, ordering takeaways, ticket-buying and utility bill-paying services that really make the concept of digital payment a game changer, the city is still looking to take the first step, Lee noted.

Despite a steep learning curve in the local market, Lee believed the territory would join the e-payment fray in a more proactive manner within the coming three to four years.

Dairy Farm International Group, parent company of local supermarket chain Wellcome, admitted in a written reply to China Daily that mobile payment only accounts for a small proportion of overall sales at their supermarkets and hypermarkets in Hong Kong but expects this trend to increase.

"For retailers, they may tend to view the golden opportunities ahead from digital payment in a more localized context," said Alex Kong, founder and chief executive of TNG, a Hong Kong-based digital wallet operator founded in 2013.

As a high-profile home-grown digital wallet in Hong Kong, TNG set its sights on easing access to finance for the unbanked and under-banked population that is said to account for half of the global population, with local retailers such as Maxim's Cakes, 759 Store and convenience store chain 7-Eleven losing no time to jump on the bandwagon.

Kong believed there are too many time-consuming discussions on the potentially huge opportunities local retailers could reap from digital payments, as well as to what extent local consumers could put aside privacy concerns a little bit and develop the habit. That may explain why retailers with the foresight could not afford to miss the boat.

Contact the writer at grace@chinadailyhk.com