Hong Kong’s days of ‘cash is king’ may be in peril as fears of Covid-19 infection boost digital payments
- The outbreak has made people worry about touching cash, which has accelerated a shift towards digital payments, according to transaction data and Visa’s local boss
- BOC Life found online sales of insurance products up 60 per cent in the first half, while HKMA digital payments also shot up 60 per cent, between December and the end of March
Visa, one of the world’s biggest payment companies, saw its e-commerce transactions in the city in the first half of 2020 rise 10 percentage points year on year, according to its Hong Kong head. In that period, 70 per cent of Visa transactions in Hong Kong were digital, up from 60 per cent a year earlier and higher than the wider Asia region at 41 per cent.
“Covid-19 has changed customers’ behaviour forever. [They] have shifted away from cash to digital payment,” she said.
The outbreak has forced a lot of people to work from home, and many more to avoid going out to do their shopping. A third of Hong Kong customers said in a Visa survey that they are shopping more online during the pandemic, which boosts digital payments, Steinebach said.
The survey of about 6,800 people in Asia-Pacific in July showed Malaysian customers had the biggest preference for using mobile phone apps to pay, at 64 per cent. Hong Kong tied with Taiwan in second at 62 per cent, ahead of India at 55 per cent. This type of payment allows customers to use an app on their smartphone to tap on a terminal at the shop, with no need to present a physical credit card.
“For a small business, the tap-to-phone is cost-effective while the customers find it convenient. During the pandemic, people want to avoid touching cash or plastic cards to avoid infection,” said Steinebach.
The HKMA, Hong Kong’s de facto central bank, said in April that its Faster Payment System (FPS), which allows 4.6 million customers to transfer money electronically between about 20 banks, had also seen its usage surge in the first quarter of the year as the outbreak took hold.
Average daily FPS turnover reached 267,000 transactions in March, a 60 per cent increase from December. The number of new users in the first quarter also rose 30 per cent from the fourth quarter of last year.