Spend hard without cash

Editorial | Mary Ma 23 Jun 2021

Giving every adult resident vouchers worth HK$5,000 can hardly boost the economy as officially claimed - but it remains to be seen if it can change the way local consumers pay.

Contrary to the mainland and some countries, cash is still the most common form of transaction in the SAR. So, will paperless payment be entrenched to replace cash as the popular form of making purchases in everyday living?

This is probably the additional value that critics of Financial Secretary Paul Chan Mo-po's HK$36 billion spending voucher scheme may have failed to appreciate.

Perhaps Chan and those spin-doctors around him should have given greater emphasis to this in their promotion of the program.

Were the scheme merely aimed at stimulating the economy with no affiliated benefits, the government could have readily done so by dishing out cash so that it did not have to go through all the trouble to involve various payment platforms.

By the way, while HK$36 billion sounds great, it is actually too small an amount to be excited about.

Warnings by a handful of critics, followed by a caution from the financial secretary, that loopholes allowing individual merchants and consumers to join hands to cheat the government to cash in the electronic vouchers are rather remote.

If any such cases do eventually emerge, these will most likely be isolated and not constitute a trend.

Apparently, Chan's earlier warnings that anyone conspiring to manipulate the scheme may face legal action were more public-relation remarks aimed at his critics rather than an admission that these irregularities would happen.

But it's true that Chan exaggerated the claim when he told lawmakers in the legislature that the money would stimulate the economy.

He seemed to be a bit over confident about the outcome - because the public will be inclined to save their wages and use the vouchers first. Unless consumers spend more than normal, the impact on domestic consumption will be negligible, if not neutral.

Nonetheless, Chan may view the scheme more as an experiment to assess if economic vouchers do have any positive effect on the economy overall. If the outcomes are positive, they may be repeated in future.

Otherwise, alternatives will have to be considered when stimuli are needed again.

So far, the most eye-catching thing of all following the voucher announcement is the keenness shown by various electronic payment service providers to attract consumers to sign up to their platforms.

Octopus Card, AliPayHK, Tap & Go and WeChat Pay HK have been chosen as the official payment platforms.

For example, AliPayHK has reportedly committed HK$1 billion worth of lures to get customers to sign up to its platform. Branded smartphones are being given out too.

Meanwhile, Octopus Card is also giving the first two million customers an extra HK$18 each if they register with it.

It's clear that these electronic payment service providers are investing in the future when cash will be replaced by electronic money.

Going paperless is a global trend.



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