Digital solutions abound in the country, but the momentum for news-vendors to modernize is low unless the technology is truly seamless
According to the 2022 McKinsey Global Payments Report, the pandemic accelerated shifts to contactless payments and e-commerce in emerging markets in Africa, Latin America, and Southeast Asia, and low banking penetration had afforded opportunities for payments providers to capture untapped potential and reach underserved populations.
In the Hong Kong payment landscape of the past, payment and settlement processing were separately managed. Due to the cash flow transfer of acquirers, settlement institutions and banks, the cash flow from payment transactions was relatively delayed after a lengthy process of circulation and advance payment. Now, the pandemic had diverted technology innovation towards making collection, payment and settlement in one step, making it easy for businesses to manage their funds, providing a pathway for real-time cash flow in the country and beyond.
Starting a domino effect
According to Lam Cheung-fu, Chairman, Coalition of Newspaper and Magazine Merchants (CHKNMM), which represents over 35,000 newsstands, its member vendors and stall operators tend to have more traditional mindsets:
- Many have been running their businesses for decades and face daily challenges related to payments and accounting
- They have relatively straightforward business models that heavily rely on cash transactions.
There is therefore a pressing need for them to undergo business transformation, and to be geared up to expand their business into the realms of digitalization and industry reform. When this industry is able to overcome inertia and comfort zones to modernize, a domino effect could set the tone for similar legacy industries to follow suit.
One firm that is a part of the innovation and collaboration in the digital payment scene in Hong Kong is Yedpay, which is helping enterprises in the country to modernize credit card payment processing encryption to break through the traditional point-of-sale machines’ fixed hardware encryption format.
Businesses only need to download an application to activate ‘mobile phone induction collection’ and use their smartphones to flexibly collect payments anytime and anywhere. Moreover, this technology does not need to be stuck with the traditional T+2 cash flow time difference — the full settlement arrives instantly.
Other payment modernization efforts in the pipeline include diversified financial products ranging from collection to remittances of merchant electronic wallets — to make digital finance more inclusive and business more intelligent — to reduce overall social costs and accelerate the operation of the economy. In addition, with digital payment models becoming mainstream, more organizations will have sufficient access to quality data to improve monitoring and response to consumers wants and needs for better personalization and inclusiveness.