Public move

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Five leading electronic payment operators in Hong Kong have been granted licenses to operate multi-purpose, stored value mobile payment systems in the city.

The granting of the first batch of stored value facility (SVF) licenses by the Hong Kong Monetary Authority (HKMA) — the city’s de facto central bank — marks a bold move to put the financial hub’s booming electronic payment business on a regulated fast track.

The five licensed SVFs are O! ePay, the city’s prepaid card Octopus’ mobile payment service; TNG Wallet; Tencent’s WeChat Pay; Alibaba-backed Alipay; and HKT’s Tap & Go.

Hong Kong’s new regulatory SVF regime took effect in November last year, with the one-year transition period granted to market operators due to expire in three months’ time.

The second batch of licenses is expected to be issued in mid-November this year and, according to the HKMA, more licenses will be granted following the expiry of the transition period.

Under the current licensing system, Octopus card and Tap & Go are allowed to operate services like online payment, mobile payment at POS (point-of-sale) machines and P2P (peer-to-peer) transfer, and issuance of physical cards.

TNG Wallet is licensed to operate all kinds of electronic payment business except for issuance of physical cards.

WeChat Pay is allowed to run both online and mobile payment business, while Alipay is only permitted to carry out online payment operations.

Sabrina Peng Yijie, vicepresident of international business at Alibaba Group’s Ant Financial Services, said winning the SVF license is a huge encouragement for the Chinese mainland e-commerce giant to beef up its payment business in Hong Kong. Alipay made inroads into Hong Kong in 2007 and, as of last month, it had convinced up to 6,000 brick-and-mortal stores in the city to accept its payment method.

Peng said the company aims to launch its Hong Kong dollar-denominated account deposit service in October, indicating that the city’s Alipay users could have their Hong Kong dollar-denominated accounts.

In order to strike a delicate balance between personal privacy and convenience, the HKMA has set the conditions for requiring real-name registration.

Users who load not more than HK$3,000 onto cardbased accounts and HK$8,000 for network-based accounts will not be required to register his or her real name. For re-loadable accounts, the threshold would be set according to a customer’s annual transaction amount.

Francis Fong, chairman of the Hong Kong Association of Interactive Marketing, called the SVF licensing system a big push for electronic payments in the SAR, saying it allows users to enjoy better protection if operators run into financial difficulties.

The voluntary, rather than mandatory real-name registration system, in particular, makes electronic payment more appealing and ensures “the pie is getting bigger and bigger”, Fong said.

So far, more than 20 companies in Hong Kong have applied for an SVF license.

Apple Pay, operated by Apple, however, is not required to apply for a license as the facility is linked to credit cards without having to perform any stored value function, said Henry Cheng, executive director of monetary management at the HKMA.

Winning the stored value facility license is a huge encouragement for us to beef up our payment business in Hong Kong.” Sabrina Peng Yijie, vice-president of international business at Ant Financial Services