Category Archives: Fintech

Velotrade: Cross-border trade financing made easier

The world of finance is being shaken up in myriad ways. Companies like Hong Kong-based Velotrade are slotting into niches, such as accounts-receivable financing, and taking off. We spoke to the firm’s co-founder and chairman, Vittorio de Angelis, about how it all works.

Continue reading Velotrade: Cross-border trade financing made easier

AlipayHK expands to mainland

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? 

Interface

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. 

Apps

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. 

Accounting system

AlipayHK account requires identity verification. Users that have not been verified will have limits on payment and are not allowed to cash out. 

Huawei Pay launches in HK

Huawei Pay was launched in Hong Kong this week. The mobile payment service, based on a security chip jointly developed by Huawei and China UnionPay, was first put into operation in Russia, in December last year. 

In Hong Kong, Huawei hopes to crack a market that has already adopted WeChat Pay and Alipay, plus eight new digital banking licensees with products under development. However, it actually has a head start, of sorts: the city boasts more than 40,000 retail shops that already accept the UnionPay contactless card payment system. 

Users can link their UnionPay card with the Huawei Pay app, and this will enable them to settle payments by simply putting their phone in front of the cashier sensor. Read more.

Foshan launches blockchain-based vaccine platform

Foshan’s Chancheng district has officially launched a “blockchain based vaccine safety management platform”, the first of its kind in Guangdong. Once implemented, all 750,000 doses of vaccine in the district will be under “full supervision”, from production to cold chain transportation, warehousing, circulation, reservation, vaccination and post-injection follow-up.

According to the Foshan Health Bureau, the platform will strengthen supervision of healthcare practitioners while offering convenience to patients. With the blockchain technology, a tracking code will be given to each vaccine and each of its movements from the factory to the warehouse to the clinic will be duly recorded, monitored and shared in real-time, via mobile devices. Prospective patients will be able to make appointments and submit enquiries online.

Read more (in Chinese).

P2P to get boost from GBA, says DBS 

China’s peer-to-peer (P2P) lending industry, which has shrunk dramatically under a government crackdown, should get a welcome boost from the development of the Greater Bay Area, according to DBS Bank.

By 2030, P2P lending will enjoy an annual growth rate of 17% in the region, making it the fourth-fastest growing sector, SCMP reported, citing the Singaporean bank’s estimate.

“We see that P2P lending across China could reach one trillion yuan by 2030, and the Greater Bay Area with its particular focus on innovation and entrepreneurship, would be more open to the P2P concept,” said Ken Shih, senior research director at DBS.

“A capital-intensive industry upgrade is inevitable, and P2P platforms can meet the financing needs of new business formats – small and micro companies in particular,” he added.

The bank ranks P2P lending fourth in a table of estimated growth rates for different sectors in the bay area by 2030. Smart appliances top the list with a forecast 30 per cent growth rate, while P2P is just behind online advertising in third place.

Read more.

HSBC plans more China tech jobs  

HSBC plans to add more than 1,000 jobs this year at its technology development centers in Guangzhou, Shanghai and Xi’an, reports Reuters.

HSBC’s expansion plan in China, a key market for the bank, comes amid growing use of technology in the financial sector – from payments to transactions. At stake is a bigger share of the billions of dollars worth of retail and corporate banking business in a major financial market with a growing customer base.

About 30% of the work done at the Guangzhou center, the largest HSBC tech facility in China with more than 5,000 employees, is for the mainland market and that share is expected to grow over the next couple of years.

Read more.

Netease Pay gets into export settlement 

Netease Pay, Guangzhou-based internet company Netease’s payment arm, has partnered with US-based Citibank to provide cross-border e-commerce operators with accounts that can collect payments in foreign currencies. China UnionPay and China Netcom will handle the forex conversion, reports Yicai Global.

The service is aimed primarily at Chinese exporters and is a new focus for Netease, which established itself as the country’s leading e-commerce platform for Chinese buying goods internationally. Cross-border financing, tax refunds and other services will likely be added in Q3, after the platform has improved its basic functions, according to a company spokesperson.

Netease’s Koala had a 27.5% market share of total cross-border e-commerce in Q1, according to Guangdong-based iiMedia Research. Alibaba’s Aliexpress service is its prime competitor.

Airwallex focuses on GBA

Airwallex — the Hong Kong-based cross-border payment service provider that only recently attained “unicorn” status, is eyeing opportunities in the GBA, reports China Daily.

“We see a lot of businesses that want to sell their products in many countries globally, but the financial services haven’t really been set up for them to grow those businesses online without physically flying there and doing a bunch of stuff themselves,” Jack Zhang, Airwallex co-founder and CEO, told China Daily in an interview.

Airwallex has been providing services to large internet companies in China like JD, Tencent and Ctrip, and the company now is moving to smaller businesses as “that’s where 80% of the international SMEs are located.”

The company set up its Shenzhen office late last year and plans to hire around 100 people this year, making it one of the its largest offices it has globally.