Alibaba’s e-wallet, Alipay, needs no introduction. Together with WeChat Pay, it is the payment app of choice for most mainland residents, who use it both at home and abroad (most retailers we visited recently in Croatia accepts it). AlipayHK, however, has signed up only2 million accounts in Hong Kong. Now the e-commerce giant is counting on its mainland network as a lure for non-committed Hongkongers, as it has been licensed to provide services countrywide. This makes AlipayHK the first Hong Kong dollar-denominated mobile payment app across the mainland and Hong Kong.
Earlier this year, the AlipayHK wallet extended its services from Hong Kong to the nine mainland cities in the Greater Bay Area, as did its nemesis, Tencent’s WeChat Pay HK. It enabled Hongkongers going to the mainland to avoid the hassle of creating mainland bank accounts, which are required to use the mainland version of the app. However, it’s not as simple as pressing a button, because retailers on the mainland still needed to be persuaded to adopt the AlipayHK payment system. Going nationwide now is expected to further accelerate this process, and the expansion could help AlipayHK boost adoption in the Hong Kong mobile and online payment market, which is currently dominated by the Octopus contactless card.
The Hong Kong version of Alibaba’s e-wallet is operated by an independent local team under a joint venture between CK Hutchison Holdings, owned by Hong Kong tycoon Li Ka-shing, and Ant Financial. It runs on POS devices connected to Hong Kong banks so that merchants can accept payments from app users.
AlipayHK said it currently has more than two million users, roughly a quarter of Hong Kong’s 7.5 million residents, and is supported at 50,000 retail outlets.
The app is not only for mobile payments. AlipayHK also offers insurance, blockchain-based cross-border remittances, and credit collection. The company is also said to be pushing forward a code-scanning payment system for Hong Kong’s MTR, scheduled to be launched next year.
Cash and the contactless Octopus card remain the payment methods of choice among Hongkongers despite the rising use of mobile payments. According to a 2018 Hong Kong Productivity Council survey, cash is still used by nearly every Hongkonger, and 97% have an Octopus card. Just over half have a credit card. This is the legacy of a tightly controlled financial system that has resisted change in the fintech industry for years – until the HKMA began to allow in new operators and awarded new virtual banking licenses this year.
The new payment apps are starting to make inroads, as AlipayHK’s numbers suggest. A follow-up survey showed that the use of mobile payments rose to 48% in the second half of 2018, without mentioning the changes to cash and Octopus card use.
AlipayHK’s two million is still a fraction of the 700 million plus users Alipay has in mainland.
So, what are the differences between the two versions?
AlipayHK has the same basic interface as its mainland version, although the top of the home page has been reduced to two items only: Scan and Pay. Missing are the Collect and Pocket functions, which allows one to receive payment and store electronic cards, coupons or tickets. The middle part of AlipayHK’s interface has various app functions including restaurant coupons, gateway to Alibaba’s ecommerce platform Taobao, credit top-up, etc.
HK dollar denominated top-up
AlipayHK is Hong Kong-dollar denominated and the user is required to bind it with a Hong Kong bank card. Credits can be topped up through online banking or terminals at local convenience stores. The e-wallet balance can be cashed out although the holder’s identity must have been verified first. Without the verification, a limit on payment amount will be imposed.
AlipayHK has provided four services: scan and pay, F&B coupons, digital shopping coupon collection and Taobao. The first three center on scan-and-go transactions, aiming to wean Hongkongers from their attachment to cash and Octopus cards.
Currently, more than 2,000 well-known brands, including jewelry chain Chow Tai Fook, supermarket chain Parkn’shop, drugstore chain Watsons, cosmetics chain Sasa, and Ocean Park support AlipayHK’s scan and pay function. That number is expected to be expanded to 20,000 by the end of the year.
AlipayHK has brought in Hong Kong’s popular restaurant review platform OpenRice to provide discounts on F&B and entertainment. AlipayHK is also taking advantage of Hongkongers’ love of collecting paper-based shopping credits, turning them into a digital format: just scan, pay and collect, without having to worry about losing credits. Cashing out credits is also instant, without having to be present.
AlipayHK account requires identity verification. Users that have not been verified will have limits on payment and are not allowed to cash out.