Safe, efficient and convenient electronic-payment (e-payment) services are crucial to the development of digital financial services. Guided by this belief, the HKMA has been actively promoting the development of e-payment services. One of our key initiatives in this area is the launch of the Faster Payment System (FPS) about four years ago. Over the past few years, the HKMA has been working closely with the industry to enhance the functions of the FPS and explore more use cases for it, with the aim of bringing greater convenience to the public and creating more development opportunities for the industry.
FPS usage continues to broaden
With the launch of the FPS, fund transfers and payments have become more efficient and convenient. The FPS has been very well received by both members of the public and merchants, with number of FPS registrations1 exceeding 10 million in March this year, and growing further to 10.9 million as of the end of August. The usage of FPS has also been growing steadily with the average daily turnover reaching 928,000 real-time transactions in August, representing a surge of 17 times as compared to that when the FPS was just launched (October 2018).
In addition to small-value transfers such as person-to-person payments for sharing the bill when eating out, many people have been using the FPS for account top-ups and merchant payments, for example, topping up e-wallets or making transfers among different bank accounts for placing time-deposits. In recent years, the FPS can also be used to pay utility bills and management fees, as well as fees and charges of different government departments and public bodies (such as the Housing Authority and the Hospital Authority). Many government departments and public bodies have adopted the FPS QR code so that the public simply scan the QR code to make payments. Currently, over 80% of government departments offer the FPS as a payment option and more public services will be included in the future. Merchants across a broad spectrum of business sectors have also adopted the FPS, including through direct debit, to collect payments. For example, schools are collecting school fees via the FPS and securities firms are providing this function for their clients to top up their cash accounts for securities trading.
Payment solutions to support merchants
In order to help reduce merchants’ operating costs, we have been in close dialogues with banks and stored value facilities (SVF) operators, encouraging them to develop low-cost, efficient and user-friendly FPS solutions for small retailers to collect payments. We understand that some banks and SVF operators have already launched or are planning to launch simple and low-cost payment solutions, such as FPS QR codes, to make payment collection more convenient, doing away with any cash exchange. They have substantially reduced or waived the related fees. Generally speaking, the fees will vary depending on the services provided by individual banks and SVF operators. For small retailers such as family-run shops or stall traders, their turnovers are usually less sizeable than that of larger corporations and operating cost is often one of their prime concerns. Therefore, simple, easy-to-use and affordable electronic payment options are just what these merchants need. Facilitating small merchants to embrace the era of e-payment is also one of the HKMA’s goals of promoting financial inclusion.
Moreover, in view of the increasing demand for making online purchases with mobile phones, the FPS has launched new payment functions, namely App-to-App (ATA) and Web-to-App (WTA), so as to provide a secure and convenient payment process. When a customer chooses to pay via the FPS from a merchant’s application (App) or webpage that supports the related function via his/her mobile, the interface will automatically switch to the banking or e-wallet App that supports such function on his/her mobile phone to allow the customer to make payment via the FPS. With the new function, all customers need to do is to verify the payment details and confirm the transaction. This can streamline the process and avoid the inconvenience of inputting payment details. Both merchants and customers can benefit greatly from the convenience brought about by these new functions. Ever since the implementation of the ATA and WTA payment functions under Phase IV Open Application Programming Interface (Open API) framework by most retail banks in December 2021, the usage of these functions have been growing steadily with the number of transactions reaching nearly 450,000 in August this year.
Expansion to cross-border payments
The application of the FPS in Hong Kong has become increasingly mature. Given the round-the-clock and instant settlement nature of the FPS, it has the potential of delivering even more benefits in the cross-border payment context. One of the key opportunities lies in the co-operation with the Digital Currency Institute of the People's Bank of China in the technical testing of the cross-boundary use of the e-CNY.
We are delighted that Hong Kong has become the first place outside the Mainland to conduct technical testing of the cross-boundary use of the e-CNY. The use of the e-CNY would promote the interconnectivity of the Guangdong-Hong Kong-Macao Greater Bay Area and improve the efficiency and user experience of cross-boundary payments. The technical testing has now entered the second phase, centering on the use of the FPS to top up the e-CNY wallet. Both the scope and the scale of testing have been expanded in this phase. The number of participating banks has increased from one to four, with their bank staff and merchants invited to take part. Riding on the good progress so far, we will invite more e-CNY operating institutions and local banks to participate in the test in due course so as to facilitate the use of the e-CNY by Hong Kong residents in the Mainland in the future.
Apart from the cross-boundary testing of the e-CNY, we are also exploring linkages with the faster payment systems in other jurisdictions, thereby allowing Hong Kong people to make payments directly through the FPS at overseas tourist hot spots. The HKMA is currently exploring with the Bank of Thailand on a bilateral arrangement of allowing Hong Kong people to use the FPS in Thailand and Thai tourists to use their local faster payment system PromptPay in Hong Kong. We hope that as the pandemic eases and tourism gradually recovers, we can provide one more safe and fast payment option for Hong Kong people travelling outside or overseas visitors coming to Hong Kong, giving them a brand new experience. This cooperation will also pave way for us to further expand the reach of our cross-border payment service in the future.
Looking back, one of the main goals of the HKMA in launching the FPS was to streamline and further improve the retail payment arrangements in Hong Kong, including making small-value transfers between banks and e-wallets, using bank accounts to top up e-wallets, thus facilitating more efficient fund flows. After almost four years, it is very encouraging to see that the FPS has been widely adopted in Hong Kong. We will continue to work closely with the industry and other stakeholders to further explore new use cases and enhance the functions of the FPS, especially in promoting the FPS to retail merchants, large or small, and exploring more cross-border retail payment opportunities, so as to provide the public with more convenient, secure and diversified payment services.
Deputy Chief Executive
Hong Kong Monetary Authority
9 September 2022