Name
Global FinTech Guide
Country _ Name
Hong Kong
SectionTitle
Payment services
Body
FinTechs belonging to this category offer alternative payment services which are supposed to provide a faster and cheaper way for national, European, and international payments for private and business customers by using new technologies.

For example, payment service providers hereby offer solutions to easily integrate several payment services in online shops.

Some FinTechs furthermore provide real cash register systems and online-reservation solutions for restaurants and shops providing their own payment services or making use of the payment services of FinTechs described above.

Introduction

Attitude of the country towards modern payment services

As a leading international financial centre, Hong Kong has efficient modern cross-border payment services, and is continuously improving its financial infrastructure to enhance payment services. There is a supportive environment for modern payment services, and FinTech more generally, in Hong Kong. For example, the Hong Kong Monetary Authority (“HKMA”), established a Fintech Facilitation Office, to help develop Hong Kong as a FinTech hub.

Features of Hong Kong’s payment services include -

  • The Faster Payment System, which is a payment platform allowing customers to make cross-bank/e-wallet payments easily, by entering the mobile phone number or the email address of the recipient;
  • The use of e-payments (via internet or mobile applications), e-cheques (an electronic counterpart of a paper cheque) and e-bills (receipt and payment of for electronic bills through internet banking accounts);
  • Stored Value Facilities, (“SVF”) such as e-wallets and prepaid cards, which store value and can be used to pay for goods or services or pay another person;

Hong Kong also aims to be a settlement hub for the region.

Legal affairs

Obligations and requirements to provide payment services or ancillary services described above

Retail payment systems (“RPS”) in Hong Kong would normally be considered SVFs. 

The HKMA is the regulatory authority for the licensing and supervision of SVF and the designation and regulation of RPS in Hong Kong. The Payment Systems and Stored Value Facilities Ordinance (“PSSVFO”) provides statutory power to HKMA on regulating SVF and RPS.

The HKMA administers a SVF licensing system. The HKMA may grant a SVF licence if the applicant satisfies certain minimum criteria (which will continue to apply to the applicant after it obtains the licence).

Further information about the HKMA's licensing requirements is available on its website: https://www.hkma.gov.hk/eng/regulatory-resources/authorization-licensing-and-approval/ 

The HKMA also regulates RPS and oversees their operations. An RPS is defined in the PSSVFO as a system or arrangement for the transfer, clearing or settlement of payment obligations relating to retail activities (whether the activities take place in Hong Kong or elsewhere), principally by individuals, that involve purchases or payments; and includes related instruments and procedures.

Additional comments regarding the legal situation for payment services or what FinTech’s must be aware of in this business area

Payment service operations licensed by the HKMA should take note of the anti-money laundering and counter-terrorist financing laws which cover their customer due diligence obligations.

Payment services involve the collection of market and personal data, which will be subject to the local data privacy law as data users. The relevant legislation is the Personal Data (Privacy) O
rdinance (“PDPO”). Payment service providers shall also comply with the non-binding code of practices and guidelines issued by the Office of the Privacy Commissioner for Personal Data (“PCPD”) from time to time to ensure that personal data are collected, used, processed, and stored properly. 

Economic conditions

Market size for payment services and biggest payment service providers

Electronic payments are regularly and widely used. The notable example is the Octopus card, which is a local card-based payment method similar to the Oyster Card in the UK and Suica in Japan. Originally, the Octopus card was only applicable to in-person payments on transportation and retail payments. Now it has expanded its application to online payments. According to Octopus, more than 30 million Octopus cards are in circulation, and approximately 98% of people in Hong Kong within the ages of 15 and 64 have an Octopus card.

According to the HKMA, there are around 3.6 million registrations, out of a population of just over 7 million in Hong Kong, using the Faster Payment System since its launch in 2018. As of September 2019, there was an average of 140,000 transactions per day. 

Additional comments regarding the economic situation for payment services or what FinTech’s must be aware of in this business area

N/A.

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