(10 July 2018 – Hong Kong) Online payment service AlipayHK has signed up 1.5 million users in Hong Kong, but encouraging the adoption of mobile payments is proving to be an uphill task amid the city’s attachment to more traditional forms of transactions and concerns over data privacy.
AlipayHK had 1 million users in March, but saw a 50 per cent surge in growth to 1.5 million users by the end of June. The company is a joint venture between tycoon Li Ka-shing’s conglomerate CK Hutchison Holdings and Ant Financial, e-commerce giant Alibaba’s financial affiliate. Alibaba owns the South China Morning Post.
AlipayHK faces competition from other providers as well as a mature payments market in Hong Kong dominated by the city’s home-grown Octopus stored-value card. Compounding adoption challenges are concerns over data privacy because of a perceived connection between AlipayHK and its mainland China peer Alipay. Although AlipayHK is a separate app from the mainland version, consumers may not differentiate between the two because of the “Alipay” branding, she said.
Unlike the mainland Alipay service, which requires users to submit personal identification information, AlipayHK only requires users to sign up with their mobile number. The wallet can be linked to credit card or bank accounts, or topped up with cash at convenience stores and other locations. The company also faces stiff competition in Hong Kong, with Western payments firms such as PayPal, mainland Chinese firm Tencent’s WeChatPay and local players such as TNG Wallet all vying for reluctant consumers’ attention.
China’s two mobile payments giants, Alipay and Tencent, are poised to lose up to US$1 billion in combined annual revenue to a new central bank requirement that third-party payment groups hold all customer funds in reserve. Chinese mobile payment transactions reached US$16 trillion in 2017 as consumers switched to smartphones from cash for supermarkets, taxis, and payments to friends. Alipay said it has already completed the necessary work to meet the reserve requirement and has “never relied on reserve funds as a source of income”. Tencent also said that the company was implementing the new rules and had informed shareholders and other stakeholders. She added that customer funds were removed from Tencent’s balance sheet in the third quarter of 2016.