Oral Question – Faster Payment System
Question by the Hon Chan Chun-ying :
On September 29 last year, the Hong Kong Monetary Authority (HKMA) announced seven initiatives to prepare Hong Kong to move into a new era of smart banking. One of the initiatives is a Faster Payment System (FPS) to be launched in late September this year. The Chief Executive of HKMA said on the same day that FPS would be a core real-time payment platform providing customers with round-the-clock, inter-bank, all-year-round and real-time fund transfer services. This platform, which will be open to all banks and operators of stored value facilities, will enable real-time transactions at retail level and provide full connectivity for the various types of operators, and by then Hong Kong will become one of the few leading regions in the international arena in this aspect. Furthermore, for the purpose of encouraging and facilitating more small merchants to accept mobile payments, HKMA is actively discussing with the industry the development of a common QR code standard which will enable merchants to connect to the payment systems of different operators by only displaying a single QR code. In this connection, will the Government inform this Council whether:
(1) HKMA has set, in respect of the launch of FPS, specific strategies, work plans and market share targets for the next few years; if so, of the details; if not, the reasons for that;
(2) it has plans to join FPS as an independent entity and takes the lead in making full use of a common QR code to collect taxes and various types of licence fees and fines; if so, of the details; if not, the reasons for that; and
(3) it has plans to make it a mandatory requirement for various public transport operators as well as chain supermarkets and convenience stores to fully accept common QR code payments; if so, of the details; if not, the reasons for that?
Reply by the Secretary for Financial Services and the Treasury, Mr James Lau :
(1) The Hong Kong Monetary Authority (HKMA) is working with the industry to develop a Faster Payment System (FPS). As a new financial infrastructure, the FPS will provide full connectivity between banks and stored value facility (SVF) operators. Through the FPS, participating banks and SVF operators can provide real-time credit transfer and real-time direct debit services to facilitate payments between merchants and customers, as well as peer-to-peer fund transfers. The HKMA expects to launch the FPS in September this year, and major retail banks and SVF operators have indicated their interest to participate. As for the settlements between merchants and banks or SVF operators, those are commercial arrangements and do not necessarily take place in real-time.
(2) Banks and SVF operators can make use of the FPS to provide various kinds of payment services and products. The Government can make use of these payment services and products provided by banks and SVF operators and does not need to participate in the FPS directly.
We note that the e-wallets offered by some SVF operators are providing bill payment service. Users can scan the barcodes on their bills (such as phone bills and Towngas bills) and make payments through the e-wallets on their mobile phones. To facilitate the development of the SVF market, the Financial Services and the Treasury Bureau is exploring with a number of Government departments on a pilot scheme under which the public can pay government bills in the same manner.
(3) We note that a number of SVF operators are providing and promoting QR code payments in Hong Kong. Their services have expanded to some chain supermarkets, convenience stores, wet markets and taxis. To promote wider adoption of mobile retail payments as well as provide greater convenience to both merchants and customers, the HKMA and the industry have established a working group on common QR code standard for retail payments. The working group will explore how to enable merchants to use a single QR code to accept payments from different SVFs.
Regarding payments for public transport, the Transport and Housing Bureau (THB) welcomes the introduction of new technology to facilitate fare collection in the public transport sector. At the same time, THB would need to ensure that any new electronic payment system to be adopted in the public transport sector for fare collection should be reliable, user friendly and efficient and would not cause disruption to the operation of the public transport and the road or traffic conditions, so as to protect the interest of passengers and road users.
The Transport Department (TD) issued “Guidelines on the introduction of a new electronic payment system for the collection of fares in the public transport sector” in June last year. TD will continue to facilitate public transport operators’ plans in introducing new electronic payment systems for public transport fare collection, having regard to the systems’ reliability, user friendliness and efficiency.
We would also like to point out that Hong Kong has a well-developed and mature electronic payment ecosystem. Various electronic payment means, including conventional and contactless credit cards, Octopus and EPS, have long been available and are widely adopted by the public for making payments. Electronic payment now accounts for about 60 per cent of total private consumption expenditure. QR code payment is only one of the various payment means, and its development in Hong Kong is still at its early stage. We believe merchants will take into account their own circumstances, scenarios of usage, customer behaviour, operating cost, etc. in choosing the payment solutions which would best suit their purposes. The HKMA will continue to work with the industry to promote a wider adoption of QR code payment on a level playing ground, so as to let consumers enjoy the benefits and convenience brought about by financial technologies.