Cash hurdle lies on path to e-payment adoption

money-glitz | Staff reporter 3 May 2021

E-payment services providers are reducing transaction fees to attract more merchants for the electronic consumption voucher scheme, but the information technology sector only expects e-payment users to increase by 10 percent as cash is the norm.

The government said last month HK$5,000 e-vouchers will be given through Alipay HK, Octopus, Tap & Go and WeChat Pay HK.

The four operators have agreed to reduce the cost of installing and using payment tools by local merchants, especially small and medium enterprises, if a merchant directly applies to the operator for a payment code or a simpler device, instead of applying through a third-party supplier.

Some digital wallet services providers offer one-stop account opening and third-party machine installation for merchants. The machine supports all means of e-payments, such as Alipay HK, WeChat Pay and Octopus, as well as credit cards.

EFT Payments (Asia) chief executive Andrew Lo, says the company offer the intergrated services without monthly fees and machine rental deposits, as many merchants report that the procedures for applying for electronic payment are complicated. For small and medium-sized enterprises, the application threshold is higher as companies need to apply to operators one by one.

Due to fierce competition among payment platforms, the transaction fees reduced from 3-4 percent charged by individual services provider to about 1.9 percent charged by the one-stop digital wallet services provider, says online shop builder Boutir co-founder, Eric Ng.

But Lo says that some merchants who stress cash flow, need to pay for the inventory. The current settlement time of electronic payment is one to two days, so it is difficult to replace cash.

The chairman of the Federation of Hong Kong Kowloon New Territories Hawker Associations, Chan Kam-wing, says the government launched a contactless payment program more than half a year ago, but only few market stalls have joined. Some older stall owners are unwilling to accept new things, and some are deterred by fees.

Chan estimates that only around 20 percent of hawkers have set up electronic payment facilities. But he says vouchers provide an impetus for hawkers and hopes market stalls that adopt electronic payment will increase to about 50 percent.

Meanwhile, not all cha chaan tengs, or Hong Kong-style cafes, provide electronic payment. A cha chaan teng owner says it has not decided yet whether to set up such a system, or not, even though sometimes there are customers who ask.

Even at restaurants with higher per capita consumption, customers do not often pay with electronic wallets.

Some medium-to-high-end restaurants with higher consumption per capita still do not know that the Octopus stored value limit has been raised to HK$3,000 from HK$1,000. So they ask for cash or credit card payment, says Francis Fong Po-kiu, honorary chairman of the Hong Kong Information Technology Federation.

Restaurant operator Jia Group (8519) executive director Cherry Wan Suet-yee estimates that around 70 percent of restaurants have e-payments but they usually accept cash and physical credit cards.

E-payment is often used by merchants with low per capita consumption.

Payment platform Yedpay co-founder Alva Wong says the company has applied e-payment in taxis, laundries, self-service vending machines, food stalls, and newspaper vendors. About 500 hawkers added e-payments a few months ago, Wong estimates.

As for the cha chaan tengs, they are worried about the high transaction fees.

Yedpay says other costs can be reduced accordingly. For example, insurance cover for a restaurant depends on the amount of cash placed in the store after the store is closed to determine the premium. Reducing the cash flow can help save on premiums.

Lo says that some merchants ignore the risks and hidden costs of cash, including theft, making mistakes in finding renewals, and the time cost of cash counting.

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May 2021

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