Tofugear, in partnership with payments platform Wirecard, has taken a deep dive into the digital payments landscape in Hong Kong, which has been encapsulated in The Digital Payments Landscape in Hong Kong 2019 report.
For this research study, we surveyed 1,000 Hong Kongers to find out more about the payment habits of Gen Z, millennial and Gen X consumers. Alongside the survey, key players in the payments market were interviewed, including Google Pay, Octopus Card Limited, TNG FinTech Group, BBPOS Merchant Services, as well as online retailers such as Zalora and SKYMART.
Behind the curve?
Hong Kong has long been seen as being behind the curve in Asia when it comes to adopting smart payments. However, our report finds a consumer that is genuinely willing to engage with new payment technologies.
While in-store payments in Hong Kong are still dominated by cash, Octopus and credit cards, digital wallets such as AlipayHK, Apple Pay and WeChat Pay are the fourth most used payment method. When it comes to online payments, digital wallets are the second most used payment method behind credit cards.
To underline how mainstream digital wallets have become, nine in ten (87%) Hong Kong consumers stated that they have used this payment method over the year. Interestingly, usage rates for the digitally native generations of Gen Z and millennials stand at a similar level to that of older Gen X consumers.
AlipayHK leads the digital wallet market
When it comes to the digital wallet providers that are active in the Hong Kong market, AlipayHK is the clear market leader, ahead of WeChat Pay. AlipayHK’s usage rates have benefitted from heavy promotional activity, for instance money off vouchers in supermarkets, which has encouraged adoption. However, question remains whether this has also resulted in a loyal customer that will continue to use Alipay after it dials down its offers.
For more information on the various digital wallet providers that are active in Hong Kong, financial comparison service MoneyHero.com.hk has put together a handy guide, showing the key features and top-up methods of each digital wallet.
What is likely to happen is that a variety of payment methods will be used alongside each other, depending on the shopping journey. For instance, that report found that consumers typically used digital wallets in supermarkets, convenience stores and restaurants.
In addition, the HK$500 mark appears to be a psychological barrier, with four in five consumers stating that they use digital wallets for amounts less than that. This can be attributed to the fact that the speed and convenience aspect of digital wallets is more relevant at lower price points. Additionally, shoppers in Hong Kong often prefer to put larger amounts on their credit cards to earn loyalty rewards or mileage.
Need for convenience
Lastly, throughout the report it was also apparent that convenience is very important for Hong Kong’s notoriously impatient consumers. Shoppers are tired of having to queue up for payments, with 86% willing to use self-checkout terminals and 81% prepared to use apps that allow for self-checkout (‘scan and go’).
This is an area where retailers are already focusing on, so they are aware of these issues. A survey held by Tofugear and Wirecard among Hong Kong retailers found that mobile POS is the number one investment priority for Hong Kong retailers over the next two years. This is exactly the type of technology that could alleviate the problem of long queues as transactions can be made anywhere in the store.
To gain full insight into the findings of the survey, The Digital Payments Landscape in Hong Kong 2019 report is available to download for free here.