Government needs to take lead on e-wallets

Since the Hong Kong Monetary Authority granted the first batch of stored-value facilities licenses in August last year, several operators have launched mobile-payment apps which allow peer-to-peer transfers or offline retail payments.

As these licensees scramble to quickly grab as much market share as possible the city has been flooded with e-wallet apps. This is a good development in that consumers have more choices. More importantly, Hong Kong has finally made another big leap in e-payment technology, 20 years after the introduction of the Octopus card in 1997.

But the sudden appearance of so many e-payment apps has also caused us a little trouble: Which one will we choose to use?

When the first batch of e-wallets was launched, several factors prevented me from downloading them. First of all, no offense but I simply did not believe these mobile payment apps would run smoothly without any bugs to deal with, particularly with their initial versions. Secondly, no one around me seemed to have the desire to try the new apps; so even if I was keen to do so, I had no one to transfer money to.

In short, overwhelmed by concern about the lack of interoperability, I decided to wait and see.

In his Policy Address this year, the Chief Executive said the government was committed to developing Hong Kong into a smart city through innovation and technology. To this end, the government announced a slew of measures to help promote innovation and technology, including a HK$2 billion venture fund.

If the government is as committed as it claims to promoting financial technology in the city, it should proactively promote the development and application of mobile payments. It can do so by taking the initiative to develop a centralized mobile payment system; it can also jointly develop such a system with private startup companies or established financial institutions.

India offers us a good example in this aspect. The Indian government recently announced in its budget for the 2017-18 fiscal year that it would shortly launch a centralized payment system, Aadhaar Pay. Consumers with a bank account The author, a CAIA designee, is an investment analyst at Harris Fraser Group.

Such a centralized mobile payment app (as Aadhaar Pay in India) would, in my opinion, solve the issue of interoperability and demonstrate the government’s commitment to promote fintech in Hong Kong.

and a mobile number do not need any physical payment instrument, so long as the merchant has installed the system. Consumers would not even need a phone or card to initiate a transaction. The Aadhaar Pay system does not involve a P2P mechanism. The concept behind this system is what I am advocating — a government-led initiative to build a smart and cashless community.

Such a centralized mobile payment app would, in my opinion, solve the issue of interoperability and demonstrate the government’s commitment to promote fintech in Hong Kong. And more importantly, it could in turn attract more foreign investment and speed up the evolution of fintech.

From a business perspective, industry players would rather go their own way because once a player acquires a handsome market share by successfully rolling out its own infrastructure, it will gain an advantage over late-comers as has been the case with WeChat Pay or AliPay on the Chinese mainland. But if Hong Kong is to catch up with the rest of the world in fintech, I believe it is necessary for the government to take the lead to develop a centralized mobile payment system.