Sponsored by. AlipayHK Smart Payment Popularity Index 2018H1. July 2018

Transcription

1 Sponsored by July 2018 AlipayHK Smart Payment Popularity Index 2018H1

2 Content 1. Introduction Background Definition of Smart Payment AlipayHK Smart Payment Popularity Index Special Topic Payment Ecosystem in Hong Kong Structure of Report Methodology Framework of the AlipayHK Smart Payment Popularity Index Study on Business Sector Study on General Public AlipayHK Smart Payment Popularity Index SPPI Result Retail Smart Payment Readiness Level Consumer Smart Payment Acceptance Level Other Findings Current Adoption Status on Smart Payment in Hong Kong Reasons to Adopt Smart Payment Barriers to Adopt Smart Payment View on Boosting Smart Payment Development Special Topic Payment Ecosystem Key Findings & Conclusion Key Findings Conclusion... 25

3 1. Introduction 1.1 Background Smartphone is already an essential and crucial element in our daily lives. In fact, Hong Kong is having one of the highest mobile phone penetration rates in the world, at 228.3% 1. Most of us now cannot imagine living without mobile phone. Similar to communications, photo-taking and video-shooting functions in mobile phone, the all-in-one device is having great potential to become an e-wallet to fit in the payment function. Although it looks really ideal in theoretical point of view to replace our cash by the e-wallet, just like we seldom bring another camera for photo-taking. The smart payment market in Hong Kong, however, is yet to develop in Hong Kong. It is worthwhile to study the factors that affect the smart payment market in Hong Kong, especially that payment is an essential economics activity in our daily lives, and hence digitalization of payment Smart Payment - is a foundation element for the development of smart city. 1 Latest data from Office of the Communications Authority (Mar 2016) 2

4 1.2 Definition of Smart Payment In this report, Smart Payment is defined as a payment for goods or services with a mobile phone or smart devices and without cash. It can occur in the following situation: Contactless Payment via mobiles P2P transfer via ewallets Contactless Payment via smart devices (e.g. watch) Inbuilt App Payment systems Payment via scanning QR Code Payment via mobile website *Contactless credit card is a new non-cash methods that are emerging to the market, however, it requires a specific physical card for the payment, it is not treated as Smart Payment in this report. 1.3 AlipayHK Smart Payment Popularity Index In view of this, the Hong Kong Productivity Council (HKPC) developed a comprehensive framework to construct the Smart Payment Popularity Index (SPPI) to keep track of the popularity of smart payment in Hong Kong from the perspective of both retailers and consumers. In 2018 the first survey applying this framework was conducted by HKPC with the sponsorship of AlipayHK Hong Kong. The index is named the AlipayHK Smart Payment Popularity Index (the Popularity Index ). The methodology of the AlipayHK Smart Payment Popularity Index Survey 2018 (the Survey ), the design of questionnaire and the execution of the interview were decided and conducted by HKPC independently. 3

5 1.4 Special Topic Payment Ecosystem in Hong Kong Besides the Index, the Survey also picks one special topic each year for in-depth study. For 2018, the chosen topic was Payment Ecosystem. In Hong Kong, there are different payment channels widely adopted by Hong Kong citizens traditionally, including cash, octopus card (stored-value card) and credit card. With the emerging smart payment market, the payment habits of Hong Kong citizens may change and migrate to cashless world gradually. It is essential to study the current payment ecosystem to facilitate upcoming strategy on smart payment. 1.5 Structure of Report This report sets out the approach and methodology in conducting the study, presenting the survey findings and then conclude the analysis. Following this introductory chapter, the rest of this document is structured as follows: Chapter 2 describes the methodology of the study in detail; Chapter 3 presents the result of Popularity Index in first half of 2018; Chapter 4 presents the other major findings and data analysis results; Chapter 5 summarizes the key findings and conclusions. 4

6 2. Methodology 2.1 Framework of the AlipayHK Smart Payment Popularity Index The AlipayHK Smart Payment Popularity Index (SPPI) is conducted by evaluating the popularity of smart payment in Hong Kong from the view of both retailers and consumers. The Popularity Index is composed of Retailer Smart Payment Readiness Level and Consumer Smart Payment Acceptance Level. The Popularity Index is in the range of 0 to 100. The higher the number, the higher popularity of smart payment is expected. Retailer Smart Payment Readiness Level includes four component sub-indices Willingness to adopt smart payment Technology readiness of the company Knowledge and perceptions towards the smart payment market Staff s knowledge in operating smart payment tools Consumer Smart Payment Acceptance Level includes four component sub-indices Willingness to adopt smart payment Habits in using smart payment and relevant device Knowledge and perceptions towards the smart payment market Confidence in secured payment Retailers Consumers 5

7 2.2 Study on Business Sector Sampling and Data Collection Data was collected by telephone interview with no less than 400 retailers in each year. The sample was randomly selected from publicly available directories and the HKSAR Census database. To guarantee that the view of every targeted industry was captured and represented in the study, while considering the actual proportion in the population, quota sampling was adopted to cover 8 main categories accordingly to the major retailers in Hong Kong, namely: 1. Supermarkets, Convenience store and Department stores, 2. Medicines and Cosmetics, 3. Clothing, Footwear and Allied products, 4. Jewellery, Watches and clocks, and Valuable Gifts, 5. Food, Alcoholic drinks and tobacco, 6. Consumer durable goods, 7. Other consumer goods, 8. Food and Beverage (with catering service) Profile of Respondents The survey successfully gauged the view of management level from 428 companies in Hong Kong. BUSINESS SECTOR 14% 7% 7% As shown in the figure, at least 7% of responses are collected for each business category, with 18% from both Other consumer goods and Food, alcoholic and tobacco. 18% 10% 18% 7% 19% Supermarkets, Convenience store, Department stores Medicines and cosmetics Clothing, footwear and allied products Jewellery, watches and clocks, and valuable gifts Food, alcoholic drinks and tobacco Consumer durable goods Other consumer goods Food & Beverage (with catering services) 6

8 Among the 428 respondents, 75% of them were Small and Medium Enterprises (SMEs) and 25% of them were Large Enterprises. SMEs 75% Large Enterprises 25% Size of Company (Number of Staff) >500 Supermarkets, Convenience store and Department stores 7% 23% 33% 10% 23% 3% Medicines and cosmetics 29% 23% 23% 10% 13% 3% Clothing, footwear and allied products 23% 27% 17% 12% 12% 7% Jewellery, watches and clocks, and 19% 31% 16% 3% 28% 3% valuable gifts Food, alcoholic drinks and tobacco 35% 39% 8% 5% 6% 6% Consumer durable goods 24% 44% 10% 10% 7% 5% Other consumer goods 58% 21% 12% 5% 3% 1% Food & Beverage 10% 33% 21% 14% 21% 2% (with catering services) All Business Categories 29% 30% 16% 9% 12% 4% 7

9 2.3 Study on General Public Sampling and Data Collection Data was collected by telephone interview with no less than Cantonese speaking Hong Kong citizens of age in each year. A contact database was generated using known prefixes (including both landline and mobile numbers) assigned to telecommunication services providers under the Numbering Plan provided by the Office of the Communications Authority (OFCA). To guarantee that the view of every age group was captured and represented in the study, while considering the actual proportion in the population, quota sampling was adopted to cover 4 main age groups, namely: 1. Aged Aged Aged Aged Profile of Respondents The survey successfully gauged the view of 1,049 Hong Kong citizens. As shown in below figure, most of the respondents were come from age groups of (32%) and (32%), following by (21%) and (15%). In term of gender, 55% of the respondents were female and 45% of them were male. 8

10 3. AlipayHK Smart Payment Popularity Index 3.1 SPPI Result The index is composed of "Retailer Smart Payment Readiness Level" and "Consumer Smart Payment Acceptance Level", which evaluates the popularity of smart payment in Hong Kong from the perspective of both retailers and consumers. The Popularity Index is in the range of 0 to 100. The higher the number, the higher popularity of smart payment is expected. The index in first half of 2018 was reported at 53.9, which is higher than the 50-mark boundary, reflecting the concept of "smart payment" is being shaped in Hong Kong. Component Weighting Retailer Smart Payment Readiness Level 50% 62.2 Consumer Smart Payment Acceptance Level 50% 45.5 AlipayHK Smart Payment Popularity Index

11 3.2 Retail Smart Payment Readiness Level The Retail Smart Payment Readiness Level measures the readiness level of retailers towards smart payment in the following four component sub-indices: Component sub-indices Weighting Willingness to adopt smart payment 25% 61.2 Technology readiness of the company 25% 58.4 Knowledge and perceptions towards the smart payment market 25% 73.3 Staff s knowledge in operating smart payment tools 25% 56.0 Retail Smart Payment Readiness Level 62.2 Among them, the "Knowledge and perceptions towards the smart payment market" (73.3) sub-indices was highest, "Willingness to adopt smart payment", "Technology readiness of the company" and "Knowledge and perceptions towards the smart payment market" were recorded at 61.2, 58.4 and 56.0, respectively. 10

12 In terms of business nature, Jewellery watches and clocks, and valuable gifts (73.7) had the highest level of readiness; followed by Clothing, footwear, and allied products (66.1); while Food & Beverage (with catering services) (57.0) and Other consumer goods (56.5) were the lowest. Component sub-indices SCD M&C CFA JWV FAT CDG OCG F&B ALL Willingness to adopt smart payment Technology readiness of the company Knowledge and perceptions towards the smart payment market Staff s knowledge in operating smart payment tools Retail Smart Payment Readiness Level SCD: Supermarket/ Convenient Store/ JWV: Jewellery watches and clocks, and OCG: Other consumer goods Department Store valuable gifts M&C: Medicines and cosmetic FAT: Food, alcoholic drinks and tobacco F&B: Food & Beverage (with catering services) CFA: Clothing, footwear, and allied products CDG: Consumer durable goods ALL: All business nature 11

13 3.3 Consumer Smart Payment Acceptance Level The Consumer Smart Payment Acceptance Level measures the acceptance level of consumers towards smart payment in the following four component sub-indices: Component sub-indices Weighting Willingness to adopt smart payment 25% 56.0 Habits in using smart payment and relevant device 25% 32.5 Knowledge and perceptions towards the smart payment market 25% 55.6 Confidence in secured payment 25% 37.8 Consumer Smart Payment Acceptance Level 45.5 In the four major sub-readings, only Willingness to adopt smart payment (56.0) and Knowledge and perceptions towards the smart payment market (55.6) were higher than the 50 marks level, while Confidence in secured payment (37.8) and Habits in using smart payment and relevant device (32.5) were on the low side. 12

14 Divided by age group, citizens aged reported the highest acceptance level towards smart payment (57.1), while those aged were at lowest acceptance level (32.2). Component sub-indices ALL Willingness to adopt smart payment Habits in using smart payment and relevant device Knowledge and perceptions towards the smart payment market Confidence in secured payment Consumer Smart Payment Acceptance Level All: All age group 13

15 4. Other Findings This chapter presents the survey findings and data analysis for the study and is divided into five subsections. The topics covered are as follows: 4.1. Current Adoption Status on Smart Payment in Hong Kong 4.2. Reasons to Adopt Smart Payment 4.3. Barriers to Adopt Smart Payment 4.4. Views on Boosting Smart Payment Development 4.5. Special Topic Payment Ecosystem 4.1 Current Adoption Status on Smart Payment in Hong Kong Business Sector Around 93% of surveyed retailers were providing non-cash payment channels. The most common channels were Credit Card (81%), Mobile Payment (43%) and Contactless Credit Card (43%). In terms of business nature, Jewellery watches and clocks, and valuable gifts (72%) and Supermarket/ Convenient Store/ Department Store (61%) had the highest adoption rate of mobile payment channel, while Consumer durable goods (18%) and Food & Beverage (with catering services) (33%) were the lowest. 14

16 General Public About 29% of the consumer respondents had tried mobile payment, and 14% indicated that they intended to adopt. In term of age group, highest adoption rate was found within age group at 51%, while (7%) was the lowest one. The consumer respondents were also asked to rate themselves in terms of attitude towards new technology/product. It was found that most of them rated Won t attempt unless necessary (48%), following by Will not try (18%), Consider when recommended by friends (18%), Observe others experience before making decision (13%), and Try at first glance (2%). The adoption rate of mobile payment was found to be varied with the attitude towards new technology/product. For those rated themselves Try at first glance, 83% had tried mobile payment, while for those Observe others experience before making decision and Consider when recommended by friends, the adoption rate were 49% and 27% respectively. 15

17 4.2 Reasons to Adopt Smart Payment Business Sector For those retailers that are providing mobile payment channel, the major reasons were found to be Satisfy customers needs (91%), following by Speed up the cashier process (58%) and Facilitate financial management (47%); while the Special Offer Provided by Mobile Payment Service Provider (6%) listed at last. 16

18 General Public For the general public, the reasons for paying by mobile include Quick transaction (55%), following by Convenient for peer-to-peer money transfer (53%) and Without the hassle of carrying coins (50%). 17

19 4.3 Barriers to Adopt Smart Payment Business Sector For those retailers not yet providing mobile payment, the major reasons includes Estimated low demand from customers (61%), following by High transaction fee (33%) and Concerns on cybersecurity (33%) 18

20 General Public For the general public, the reasons of not yet adopting mobile payment include Unfamiliarity with the operation (68%), Worries of personal data leakage (55%) and Satisfaction with current payment methods (46%). 19

21 4.4 View on Boosting Smart Payment Development Business Sector To boost the adoption rate of mobile payment in Hong Kong, the retailer respondents think that it is necessary to Strengthening cybersecurity and its regulation (60%), following by Government to take the lead in providing relevant payment channels (53%) and Continue to provide relevant discount and special offer (51%). 20

22 General Public While in the consumer perspective, they believed that it is necessary to Increasing the number of locations/shops that accept mobile payment (64%), followed by Strengthening cybersecurity and its regulation (60%) and Government to take the lead in providing relevant payment channels (53%). 21

23 4.5 Special Topic Payment Ecosystem Current Payment Habit of Hong Kong Citizens The survey also explored the Payment Ecosystem of Hong Kong in the Past Year. The results show that among the payment channels that the citizens used regularly or occasionally, cash still topped the list (99%), followed by Octopus Card (97%) and Credit Card (53%); Contactless Credit Card and Mobile Payments accounted for 25% and 20% respectively Brand Awareness of E-Wallet Service Provider For the brand awareness of e-wallet service provider among surveyed citizen, Alipay and Wechat Pay were leading the industry, where 82% of them heard of the brand of Alipay and 22% are using the service; and 84% of them heard of the brand of Wechat Pay and 19% are using the service. 22

24 5. Key Findings & Conclusion 5.1 Key Findings SPPI 2018H1 Component Weighting Retailer Smart Payment Readiness Level 50% 62.2 Consumer Smart Payment Acceptance Level 50% 45.5 AlipayHK Smart Payment Popularity Index 53.9 Other Findings Current Adoption Status on Smart Payment Reasons to Adopt Smart Payment Barriers to Adopt Smart Payment Retailer 93% providing non-cash channel Within those providing non-cash channel, 43% are providing mobile payment channel Jewellery watches and clocks, and valuable gifts: 72% Supermarket/ Convenient Store/ Department Store: 61%. Food & Beverage (with catering services): 33% Consumer durable goods 18% Top 3: Satisfy customers needs (91%) Speed up the cashier process (58%) Facilitate financial management (47%) Top 3: Estimated low demand from customers (61%) High transaction fee (33%) Concerns on cybersecurity (33%) Consumer 29% tried mobile payment 15-24: 35% 25-34: 51% 35-49: 32% 50-64: 7% 14% plan to try mobile payment Top 3: Quick transaction (55%) Convenient for peer-to-peer money transfer (53%) Without the hassle of carrying coins (50%) Top 3: Unfamiliarity with the operation (68%) Worries of personal data leakage (55%) Satisfaction with current payment methods (46%) 23

25 Retailer Consumer Views on Top 3: Top 3: Boosting Smart Strengthening cybersecurity and its Increasing the number of Payment regulation (60%) locations/shops that accept mobile Development Government to take the lead in payment (64%) providing relevant payment channels Strengthening cybersecurity and its (53%) regulation (60%) Continue to provide relevant Government to take the lead in discount and special offer (51%) providing relevant payment channels (53%) Payment Ecosystem in Past Year Payment Channel Used Regularly/ Occasionally Cash 99% Octopus Card 97% Credit Card 53% Contactless Credit Card 25% EPS 28% Mobile Payment 20% Online Payment 13% Retailers Pre-paid Card 8% Brand Awareness of Mobile Payment Services Providers Heard of the Brand Name Already Using the Service Alipay 82% 22% Wechatpay 84% 19% Apple Pay 67% 13% Payme 31% 8% Samsung Pay 52% 5% Tap & Go 23% 4% TNG 13% 2% O! epay 14% 2% 24

26 5.2 Conclusion 1. The concept of "smart payment" " is being shaped in Hong Kong The index in first half of 2018 was reported at 53.9, which is higher than the 50-mark level, indicating that the concept of "smart payment" is gradually taking root in Hong Kong. 2. Compared to Consumer Smart Payment Acceptance Level, the Retailer Smart Payment Readiness Level is much better "Retailer Smart Payment Readiness Level" was reported at 62.2, with all four component subindices above the 50 demarcation; while Consumer Smart Payment Acceptance Level reported a slightly-lower-than-expected reading of

27 3. There is still a lot of room for improvement in consumer aspect, especially for "Confidence in secured payment" and "Habits in using smart payment and relevant device " Most of the citizens own mobile devices, however, the proportion that treat it as e- wallet is not that high, and even lower for those experienced paying through mobile. Also, the potential risks in mobile payment still being an obstacle for them to adopt smart payment. 4. Age group of "50-64" requires special attention to improve the popularity of smart payment In term of age group, those in got highest acceptance level (57.1), while those only reported at 32.2, a significant distance with other age groups. It should be noted that people aged are accounting around 34% for the whole Hong Kong population that aged between 15 and

28 5. Most retailers provide non-cash payment channels, and mobile payment channels are also emerging Over 90% of surveyed retailers are providing non-cash payment channels, with the most common channels are Credit Card (81%), Mobile Payment (43%) and Contactless Credit Card (43%). 6. The remaining retailers believe that the demand of mobile payment among customer is not justified to make huge investment on mobile payment For those retailers not yet providing mobile payment, it is mainly due to Estimated low demand from customers (61%). Reasons that related to financial issue - High transaction fee (33%), High capital investment (28%) - also listed within top 4 position. 27

29 7. Retailers estimating low demand from customers got their reasons Currently only 29% of surveyed citizens tried mobile payment, and the adoption rate was even lower to 7% for the age group It is expected that alongside with the accumulating of mobile payment experience, the adoption rate will be increased through peer recommendation Citizens can be classified in five aspects by attitude towards new technology/product : 1. Try at first glance (Pioneers) 2. Observe others experience before making decision (Observer) 3. Consider when recommended by friends 4. Will not attempt unless necessary 5. Will not try Most of the Pioneers already tried mobile payment (83%), and Observer are migrating to it as well (49%). It is expected alongside with the mobile payment experience accumulated and become more and more mature, the adoption rate will be increased through peer recommendation. 28

30 9. Retailers shall take the first step to lead the smart payment development To boost the adoption rate of mobile payment in Hong Kong, citizens named Broaden the Location/Store that Accept Mobile Payment (64%) as the top issue. However, retailers stop investing due to the perception of the low demand of new payment channel among their customers, which hinder the Smart City development of Hong Kong. In fact, the barriers to entry of some mobile payment models available in the market is not that high. Retailers may wish to initiate the first step from these models, so as to provide one more payment channel to their customer, together with building up digital foundation to get ready for e-commerce and m-commerce. 10. Cybersecurity is a common concern of both retailers and general public, and the government also got a huge role to play in the development of smart payment Supervising and Strengthening Cybersecurity and Government Shall Led the Provision of Mobile Payment Channels were the common top 3 suggestions named by retailer and general public. Where Supervising and Strengthening Cybersecurity was top in retailers and second in general public; while Government Shall Led the Provision of Mobile Payment Channels was second in retailers and third in general public. - End of Report - 29

31 About HKPC SPPI The Hong Kong Productivity Council (HKPC) is a multi-disciplinary organization established by statute in HKPC s mission is to promote productivity excellence through the provision of integrated support across the value chain of Hong Kong firms, to achieve a more effective utilization of resources, to enhance the value-added content of products and services, and to increase international competitiveness. HKPC conducts independent Study on various topics related to both business and public sector to support the industry. For more information, please visit HKPC website at About AlipayHK The electronic wallet is operated by Alipay Financial Services (HK) Limited and supervised by the Hong Kong Monetary Authority. APSHK is a joint venture established and managed by the CK Hutchison Holdings Limited, a multinational conglomerate spanning over 50 countries and Ant Financial Services Group, a leading global technology and financial services company and parent company of Alipay. For more information, please visit Currently, over 20,000 local retail outlets have supported electronic wallet for payment, covering large chain stores, convenient stores, drugstores, supermarkets, wet markets, taxies, restaurants and others. Features of electronic wallet include payment on Taobao and TMall, P2P transfer, remittance, electricity payment, telecom payment, entry tickets and F&B vouchers for The Racecourse, purchase of insurance products offered by third party, e-coupons, etc, making Hong Kong residents lives more convenient by integrating mobile payment into daily lives. License The content and data in this report is owned by Hong Kong Productivity Council (HKPC). The content of this report is provided under the Creative Commons Attribution 4.0 International License, or CC BY 4.0 ( You may share and adapt the content for any purpose, provided that you attribute the work to HKPC. Disclaimer HKPC and AlipayHK shall not have any liability, duty or obligation for or relating to the content and data contained herein, any errors, inaccuracies, omissions or delays in the content and data, or for any actions taken in reliance thereon. In no event shall HKPC or AlipayHK be liable for any special, incidental or consequential damages, arising out of the use of the content and data. 30

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