Spread­ing out all its ten­ta­cles

The Oc­to­pus has be­come HK’s name card, nearly 20 years af­ter its de­but. As Emma Dai re­ports, the smart-card op­er­a­tor is go­ing the ex­tra mile to scale new heights.

China Daily (Canada) - - HONG KONG -

It’s been al­most two decades since Oc­to­pus made its de­but in Hong Kong, and has since be­come the city’s ubiq­ui­tous name card.

While the num­ber of Oc­to­pus cards is­sued so far has sur­passed the SAR’s pop­u­la­tion, the one big ques­tion that has emerged is: What’s next? Oc­to­pus is and will al­ways be an eas­ier so­lu­tion for com­pre­hen­sive ser­vices, says the head of the smart-card com­pany.

“In terms of re­tail pay­ment, we’re fac­ing more and more chal­lenges to­day. But mul­ti­task­ing is our com­pet­i­tive edge. In one sin­gle card, we’ve packed in com­pre­hen­sive ser­vices and what you need to do is just a sim­ple touch. In terms of mak­ing life eas­ier, no one else can beat us,” Sunny Che­ung Yiu-tong, chief ex­ec­u­tive of­fi­cer of Oc­to­pus Hold­ings Ltd, told China Daily in an ex­clu­sive in­ter­view.

“Ev­ery day, the world comes up with new tech­nolo­gies, but pop­u­lar­iza­tion is al­ways the key. Com­pared with other pay­ment choices, Oc­to­pus is an eas­ier and more ac­ces­si­ble ap­proach for ev­ery­one to adapt to — from school kids to the el­derly — with just a HK$50 de­posit,” he says.

The first Oc­to­pus card was launched in Hong Kong in Septem­ber 1997 as a con­ve­nient al­ter­na­tive to pay­ing pub­lic trans­port fares with cash. By far, the smart-card op­er­a­tor had is­sued 30 mil­lion cards — more than four times the city’s pop­u­la­tion of 7.24 mil­lion.

To­day, above 70,000 pointof-sale (POS) ter­mi­nals are beep­ing in the city, with 6,000 ser­vice providers across trans­porta­tion fa­cil­i­ties, re­tail stores and park­ing me­ters, as well as ac­cess con­trol of count­less res­i­den­tial and of­fice build­ings. Among them, the re­tail sec­tor alone operates about 7,000 ter­mi­nals. More than 13 mil­lion trans­ac­tions are made us­ing Oc­to­pus cards ev­ery day, gen­er­at­ing a cash flow of HK$150 mil­lion.

A sur­vey con­ducted last year found that among the 15-64 age group, 99 out 100 lo­cal res­i­dents use the Oc­to­pus card. Apart from reload­ing man­u­ally with cash, more than 1.5 mil­lion cus­tomers have signed up for the au­to­matic add-value ser­vice pro­vided by over 20 financial in­sti­tu­tions, en­sur­ing that their cards would never run out of value.

“We’re pretty sure that, apart from lo­cal dwellers, ac­quir­ing an Oc­to­pus card is also the first thing many tourists would do af­ter ar­riv­ing in Hong Kong. Many of them would keep the card for fu­ture vis­its. The ris­ing num­ber of tourists in the SAR also drives our busi­ness,” says Che­ung.

Last year, 60.84 mil­lion peo­ple vis­ited Hong Kong, rep­re­sent­ing an year-on-year growth of 12 per­cent. In the first nine months of this year, the num­ber of vis­i­tor ar­rivals edged down by 0.5 per­cent to 44.42 mil­lion, ac­cord­ing to lat­est data from the Hong Kong Tourism Board.

How­ever, a bot­tle­neck has emerged fol­low­ing high­speed growth in the early days. Che­ung reck­ons that the growth mo­men­tum for Oc­to­pus has been “steady” in re­cent years. While the card’s pen­e­tra­tion rate has been “very high” among var­i­ous pub­lic trans­porta­tion ser­vices, the re­tail industry, which started ac­cept­ing the card in 2000, has be­come the ma­jor growth en­gine in terms of vol­ume and rev­enue this decade. “Ex­tend­ing the re­tail cov­er­age would help to in­crease the card’s daily us­abil­ity and lift user ag­glu­ti­nant among cus­tomers,” Che­ung says.

Tra­di­tion­ally used in con­ve­nience stores and su­per­mar­kets, the Oc­to­pus card is con­quer­ing new ter­ri­tory in the cater­ing busi­ness against the back­drop of chang­ing de­mo­graph­ics in Hong Kong.

“Growth has been fast in Chi­nese res­tau­rants, cha chaan teng and fast-food sta­tions in the last two years,” says Che­ung.

“De­spite ris­ing la­bor costs, an acute short­age of man­power has be­come an in­creas­ingly press­ing prob­lem for the cater­ing sec­tor. More and more mid­priced, din­ing-out places are turn­ing to Oc­to­pus ter­mi­nals, which is a much faster chan­nel than pay­ing with cash. With the ser­vice, both white- and blue-col­lar work­ers no longer need to queue up at the cashier’s counter in res­tau­rants af­ter a lunch on week­days,” he says.

To solve the la­bor short­age prob­lem, Oc­to­pus also co­op­er­ates with ma­jor fast-food restau­rant op­er­a­tors, such as Cafe de Co­ral, Maxim’s and McDon­ald’s, to de­velop self-help or­der­ing sys­tems so that cus­tomers can first se­lect their food on a vend­ing ma­chine , or with their mobile phones, and then pay with the Oc­to­pus card when col­lect­ing the food. This saves them a lot of time queu­ing up at the pay counter.

“It’s not hard to do as long as the op­er­a­tor is will­ing to up­date the or­der­ing sys­tem and ad­just the pro­ce­dures. We would ad­vise them to com­bine pay­ment and ser­vices to pro­duce faster ser­vices at a lower cost,” Che­ung says. “It’s not just for the cater­ing industry. In­te­grat­ing the pay­ment sys­tem and self-help coun­ters in su­per­mar­kets or vend­ing ma­chines is a trend.”

Ac­cord­ing to Che­ung, Oc­to­pus has never changed its fo­cus on pay­ments of small amounts. But over time, the con­cept of “small amounts” is chang­ing. “To­day, an av­er­age meal could cost HK$100 or above,” he notes. “On the other hand, many peo­ple are still pay­ing cash at su­per­mar­kets, for in­stance. There is a psy­cho­log­i­cal bar­rier in the fur­ther use of the Oc­to­pus card, but the chances for growth are plenty.”

Che­ung says one of the growth op­por­tu­ni­ties lies with on­line pay­ment. In Fe­bru­ary last year, Oc­to­pus be­gan col­lab­o­rat­ing with Ali­pay and Taobao Mar­ket­place to fa­cil­i­tate on­line pur­chases on Taobao. com — the main­land e-com­merce plat­form launched by tech gi­ant Alibaba Group. With a reg­is­tered Oc­to­pus card and an app in­stalled on mobile de­vices, users can com­plete pay­ments on the shop­ping web­site.

“Hong Kong peo­ple are now known to shop mainly on main­land e-com­merce plat­forms like Taobao and for­eign web­sites, such as Ama­zon. Over time, we hope to co­op­er­ate with more shop­ping web­sites to pro­vide one more on­line pay­ment choice, other than credit cards, for lo­cal con­sumers,” he says.

Be­yond Hong Kong, Che­ung expects to grad­u­ally pen­e­trate ma­jor ci­ties on the main­land. In 2012, Oc­to­pus teamed up with Shen­zhen­tong Co Ltd and Ling­nan Pass Com­pany Ltd — its coun­ter­parts in Guang­dong prov­ince — to is­sue co-named cards. The Oc­to­pus-Ling­nan Pass en­ables users to pay in Hong Kong and 17 Guang­dong ci­ties with a sin­gle card, whereas the Hu Tong Xing card al­lows pay­ments in both Shen­zhen and the SAR.

So far, more than 40,000 users have cho­sen the ser­vice, mostly peo­ple who com­mute reg­u­larly be­tween Hong Kong and the main­land.

“It would take time for th­ese cards to be­come as pop­u­lar as the Oc­to­pus,” Che­ung ar­gues. “Ide­ally, we would pre­fer one card for all pay­ments in the world. But there are hur­dles in terms of com­mon tech­nol­ogy stan­dards, a united clear­ing sys­tem and reg­u­la­tory re­quire­ments.”

“In the short term, we look for­ward to a sin­gle-card so­lu­tion for the en­tire Pearl River Delta re­gion, and this would be the next break­through.”

Con­tact the writer at em­madai@chi­nadai­lyhk.com

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