When was the last time you visited a bank to transfer funds? Have you been making fewer ATM withdrawals nowadays? Take a look at the way our habits have changed, and we will realise much of it boils down to our daily lives becoming more and more digitalised. Indeed, the mobile phone has long ceased to be just a channel for phone calls and messages. Enabled by the Internet and armed with all kinds of applications, it has become a multipurpose one-stop device capable of accessing news, information, entertainment, banking and e-wallet services. Like me, many readers have probably come across a similar experience: you might not turn back home if you have forgotten your wallet, but you will definitely rush back if it is the mobile phone you have left behind!
Thanks to the convenience brought about by mobile technology, the Faster Payment System (FPS) introduced by the HKMA two years ago has been widely used by the public. Since its launch, the FPS has recorded more than 4.6 million registrations and processed over 65 million transactions involving an aggregate amount topping HK$1 trillion. Amid the outbreak of the novel coronavirus, FPS usage has grown even more in the first quarter of this year. Average daily turnover reached 267,000 transactions in March 2020, a sharp increase of 60% from the 167,000 transactions in December last year and more than quadrupled since September 2018, when the FPS was launched. As for registrations, we recorded an increase of 650,000 registrations in the previous quarter, 30% more than the 500,000 registrations in the fourth quarter of 2019. Did these spikes result from the outbreak or are there other contributing factors?
FPS helps you fight the virus
Many companies have made arrangements for their staff to work from home amid the outbreak. Added to that, we have been going out less and staying at home as far as possible to prevent the spread of the virus. We turn to electronic channels to perform myriad daily chores, such as using the FPS to transfer money to friends and relatives and to pay bills, thus minimising the need to visit the bank. The key feature of the FPS is full connectivity between banks and e-wallet operators, breaking down barriers in fund transfers among these service providers so users can top up their e-wallets instantly for free without stepping out of the door. During the coronavirus outbreak, some members of the public will also choose to use the e-wallet instead of cash to make payment. As would be expected, the increased usage results in higher volumes of e-wallet top-ups via the FPS.
Another factor: more channels for usage
The epidemic aside, the increased use of the FPS in the previous quarter has also been spurred by a gradual extension in the scope of usage, from primarily person-to-person payments at the initial stage to bill, retail and business payments. Of the additional 100,000 average daily transactions recorded in the first quarter of this year, about half were merchant payments. The increase was partly due to the government accepting the use of the FPS for bill payment from the end of 2019. All people have to do is to simply scan the QR code on their tax, water and government rate/rent bills to make payment, without any need to input the bill number or amount. With digital payment as easy as that, the FPS has naturally become very popular. In just five months since its launch for government bills, 520,000 FPS-enabled bill payments have been recorded, involving about HK$640 million. Apart from the government bills, more merchants have also accepted customers to pay electricity, gas, insurance premium and other bills through FPS. As of now, FPS has 18,000 merchant registrations.
The next time you go shopping, pay attention to how more and more merchants are now displaying the FPS logo or QR code at their cashier counters. FPS adoption among merchants to receive and transfer money is the main cause of the recent surge in such transactions and will only increase with time. Take for example your neighbourhood Hong Kong Jockey Club, where punters can transfer funds instantly into and out of their betting accounts through the FPS. In fact, we have observed significant increases in FPS transactions on Wednesdays and Sundays.
When we launched the FPS one and a half year ago, the aim was to resolve three bottlenecks in retail payment in Hong Kong, namely small-value interbank transfers, transfers between e-wallets, and e-wallet top-ups via the bank account. Linking up these different retail payment systems would facilitate a smoother flow of funds and promote competition between banks and e-wallet operators, benefitting personal and business users. By the look of things, the FPS has met with initial success. We will step up efforts to promote the platform to more retailers and SMEs to help them reduce operating costs while providing more convenient payment services to society at large.
Senior Executive Director
Hong Kong Monetary Authority
24 April 2020