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Hong Kong Country Report

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  • Published Date: June 2020

A comprehensive overview of the cards, payments and consumer banking market in Hong Kong, with clearsighted commentary backed by relevant data.

Hong Kong is a developed cards market marked by an elevated degree of card ownership, a deep and wide acceptance infrastructure and a knowledgeable populace familiar with the advantages associated with payment cards. E-wallets, however, have overtaken credit cards as the leading online payment method, with a common QR code standard introduced in 2017 to sustain further growth and the major Chinese wallets becoming popular. Eight digital-banking licences have recently been issued and 18 companies have obtained licences to issue Stored Value Facilities since 2016.

What you will learn from this Hong Kong payments research report:

  • How credit card issuers stay relevant in Hong Kong.
  • What is happening in mobile payments.
  • Why cash is so entrenched.
  • How the Octopus card has evolved.
  • What drives profit in credit cards.

HONG KONG CARDS AND PAYMENTS REPORT | KEY FACTS

  • Hong Kong is an international business, trade and financial hub in the heart of East Asia, with mainland China as its hinterland.
  • An extended period of civic unrest was followed in May 2020 by Beijing's announcement of a national-security law that may threaten its role as a bridge into mainland China.
  • Cash remains an integral part of the payments ecosystem in this market. However, cards have overtaken cash as the most popular method for consumer payments.
  • Hong Kong has a well-established payment cards market. This has been driven by the early adoption of the Octopus smartcard, an extensive acceptance infrastructure and aggressive promotion by issuers to encourage card spending.
  • Credit cards are the most popular card-based payment method in Hong Kong: banks work closely with merchant partners to offer some of the world's most lucrative credit card incentives to customers.
  • Half a dozen global card brands compete in the market, with Visa dominating. Recently, UnionPay has been growing, as have newer Chinese methods such as Alipay and WeChat Pay.
  • The debit cards space is almost entirely dominated by EPS, a function embedded into credit cards or ATM cards.
  • Multifunction cards are common in Hong Kong. Many credit cards are combined with EPS debit functionality and/or an Octopus prepaid facility.
  • The prepaid cards market is dominated by the Octopus card, the world's first contactless, reloadable smartcard.

Hong Kong Payments Research | Report Contents

Key Topics
Demographics and the economy
Payments environment
Cards market
Mobile payments
Profit pool
The networks
Key retail banks and issuers
Acquiring and processing
Online acquiring
Regulatory and other cards market information

Appendices: Card Payments Data

Appendix I: Demographics and the economy

  • Demographic and economic indicators
  • Ownership of key consumer devices
  • Internet usage by population

Appendix II: Payments environment

  • Access points
  • Account penetration
  • Consumer payment trends
  • B2C e-commerce payment methods

Appendix III: Cards market

  • Total cards payment metrics
  • Contactless cards metrics
  • Credit card data numbers
  • Total credit card data metrics
  • Credit cards profitability indicators
  • Debit cards data numbers
  • Debit cards metrics
  • Prepaid/e-money cards metrics

Appendix IV: Mobile payments

  • Stored value facilities
  • Mobile proximity payment metrics

Appendix V: Profit pool

  • Profit pool

Appendix VI: The card networks

  • Networks' credit card market shares
  • Networks' credit card numbers
  • Networks' credit card billed volume
  • Networks' number of credit card transactions
  • Networks' average credit card transaction value
  • Credit card interchange fees by network
  • Networks' debit card market shares
  • Networks' debit card numbers
  • Networks' debit card billed volume
  • Networks' number of debit card transactions
  • Networks' average debit card transaction value
  • Debit card interchange fees by network (signature debit cards: exempt)
  • Debit card interchange fees by network (signature and PIN debit cards: regulated)

Appendix VII: Key retail banks and card issuers

  • Key credit card issuers market shares by credit card numbers
  • Key issuers market shares in credit card outstandings
  • Key debit card issuers market shares by debit card numbers
  • Key private label card issuers market shares by credit card numbers

Appendix VIII: Acquiring and processing

  • Merchant acquirer credit card market share
  • Credit card merchant service charges
  • Merchant acquirer debit card market share
  • Debit card merchant service charges
  • Credit card issuer/issuing processor relationships
  • Credit card acquirer/acquiring processor relationships
  • Credit card issuing processor market shares by card numbers
  • Credit card acquiring processor market shares by the number of POS transactions

Appendix IX: Online acquiring

  • Online merchant acquirer market share

Hong Kong Country Report | Selected Extracts

Demographics and Economy:
Hong Kong is a leading telecommunications hub for the Asia- Pacific region. Mobile phone usage has undergone rapid growth since the 1990s, with mobile telephony estimated to reach a density of 265 per 100 inhabitants as of 2019, of which 85 are smartphones.

Payments Environment:
The majority of payment cards are effectively dual-function credit and debit cards, and cardholders can choose which function to use at the point of sale. In addition, there are a number of banks that offer co-branded Octopus cards.

Cards market:
Usage of credit and debit cards at the point of sale has accelerated in recent years. From 2013 to 2019, the cumulative number of purchase transactions increased by 68%, while the average transaction value decreased by 12% over the same period.

Mobile Payments:
Hong Kong is one of the fastest-growing NFC mobile payment markets in the world, a growth fuelled by a growing awareness of contactless, high smartphone penetration and increased availability of suitably equipped devices.

Profit Pool:
It is common for the average Hong Kong resident to take out cards with several issuers in order to take advantage of discounts at a variety of merchants. As a result of these introductory bonuses and offers, there is a high acquisition cost for issuers gaining new credit card customers.

Card Networks:
Visa maintains a dominant position in Hong Kong's credit cards market, followed by Mastercard. In recent years, UnionPay has been growing due to mainland China's increasing role in Hong Kong. Owned by a consortium of 21 major Hong Kong banks, EPS has enjoyed an effective monopoly of debit-card provision.

Key Retail Banks and Issuers:
Hong Kong's banking sector is HSBC extremely competitive, with a comparatively large number of retail banks for a market of around 7.5 million people. Between the three authorised categories – licenced, restricted licence and deposit-taking – there are nearly 200 banks.

Acquiring and Processing:
The widespread acceptance of all major credit card schemes – Visa, Mastercard, JCB International, American Express, Diners Club and UnionPay – ensures high volumes being spent at the POS.

Online Acquiring:
Credit cards are the second-most popular online payment method in Hong Kong, accounting for an estimated 34% of total e-commerce billed volume in 2019. The most popular method is the e-wallet (eg, Alipay HK, WeChat Pay and PayPal), which holds a 49% share.

Regulatory and Markets Information:
Hong Kong Monetary Authority (HKMA) approval is required to carry out banking business activities in Hong Kong. Those authorised by the HKMA are referred to as Authorised Institutions (AIs).

Hong Kong Payments Trends | Entities Referenced

1010
2Checkout
33 Financial Services
7-Eleven
AEON Credit Services
Alibaba
Alipay
AlipayHK
Amazon
American Express
Ant Financial
Apple Pay
Apple Pay
Asia Miles
AsiaPay
Autotoll
AXA Hong Kong
Bank of China (Hong Kong)
Bank of Communications
Bank of East Asia
Bank of Taiwan
BEA
BOC Credit Card
BOC Hong Kong
BOCHK
Braintree
Carousel
Cathay Pacific
Chekiang First Bank
China CITIC Bank
China Construction Bank
China UnionPay
Citibank
CNCBI
Csl
Dah Sing Bank
DBS
Diners Club
Discover
DTC Association
DTCA
Eastern Miles Point
eBay
ePaylinks Technology
EPS
EPS Company
eWAY
Faster Payments System
Federation of Hong Kong Industries
FHKI
Financial Information Service Company
FISC
Fiserv
FPS
Geoswift Cards Services
Global Payments Asia Pacific
GlobalCollect
Google
Google Pay
Hang Seng Bank
HKAB
HKJC
HKMA
HKT
HKT Payment
HKTV Mall
Hong Kong Association of Banks
Hong Kong Jockey Club
Hong Kong Monetary Authority
Hong Kong Telecommunications
HSBC
I.T
ICBC
IKEA
Industrial and Commercial Bank of China
JCB
JD
JETCO
Joint Electronic Services Teller
K & R International
Mastercard
Merchant Solutions
Messenger
mPay
OCBC Wing Hang Bank
Octopus
Octopus O! ePay
Octopus Online
Optal Asia TNG (Asia)
PayDollar
PayMe
PayPal
Peninsula
Phoenix Miles
Planet Payment
PPS
Samsung Pay
Sands China
Shanghai Commercial Bank
Sky Pearl Club
Standard Chartered
Stored Value Facilities
SVF
Taobao
Tap & Go
Tappy Technologies
Tmall
TNG
Transforex (Hong Kong) Investment Consulting
UniCard Solution
UnionPay
Visa
WeChat Pay.
Whatsapp
Wing Lung Bank
World Bank
Yintran Group
ZA Bank
Zalora
ZhongAn Financial Services

MORE ASIA-PACIFIC CARDS & PAYMENTS REPORTS

Verisk reports deliver invaluable market and competitor intelligence on payments cards, e-money, acquiring/processing, retail banking, and consumer credit around the globe. Analysts and researchers use both primary and secondary source data and conduct in-depth interviews with Asia Pacific industry executives and experts.

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