18 May 2020
Posted in Banking
COVID-19 outbreak will drive digital payments in Hong Kong, says GlobalData
As shoppers and consumers across Hong Kong continue to adjust to social distancing measures due to health concerns amid coronavirus (COVID-19) outbreak, cash payments are set to decline and card payments will rise over the next four years, says GlobalData, a leading data and analytics company.
GlobalData’s revised-forecasts for card transactions in Hong Kong predict that the ATM cash withdrawals value will grow at a subdued compound annual growth rate (CAGR) of 1.2% between 2019 and 2023 while card payments value will rise at a CAGR of 4.7% during the same period, though at a slower pace than the previous estimates.
Nikhil Reddy, Banking and Payments Analyst at GlobalData, comments: “The pandemic has resulted in a shift in consumer spending behavior, as wary customers will cut down on purchases of non-essential items, thereby resulting in overall decline in consumer spending which in turn is set to affect the payments growth.”
Consumers are switching from in-store to online purchases in order to avoid exposing themselves to disease vectors such as cash and POS terminals. HKTVmall, a Hong Kong-based e-commerce platform, reported a 165% increase in the number of orders in February 2020 compared to same month in 2019.
Furthermore, consumers are increasingly using mobile wallet solutions for in-store payments, as these solutions are arguably ‘safer’ than cards in terms of avoiding disease vectors such as point of sale (POS) terminals. Electronic payments firm Octopus announced that its mobile wallet usage increased by 20% and 30% in January and February respectively.
Reddy concludes: “Though the pandemic will cause a short-term impact on payment volumes, it is expected to bring a change in consumer payment behavior by driving the adoption of electronic payment, particularly non-contact tools such as contactless cards and mobile wallets at an expense of cash.”