Hong Kong online retailers are ignoring Gen Z consumers, according to a new report on the local payments market by unified commerce platform Tofugear and financial technology firm Wirecard.
The research found that the territory’s e-commerce sites are not catering to Gen Z consumers when it comes to the payment options they offer.
In contrast to older millennial and Gen X consumers, credit-card ownership rates among this demographic – those born between 1997 and 2012 – are low. As a result, one in three Gen Z consumers (35 per cent) prefer to make online purchases via a cash-on-delivery option.
The Digital Payments Landscape in Hong Kong 2019 report finds that while Hong Kong online retailers such as Zalora are already catering to this trend, they are in the minority as only around 5 per cent of all retailers in the territory offer a cash-on-delivery option for online purchases.
“Retailers should ignore Gen Z at their own peril,” says Tiffany Lung, retail analyst at Tofugear. “Much focus has been on millennials, but the consumer behaviours of Gen Z are radically different – particularly when it comes to payment preferences. They think traditional payment methods are as lame as Facebook.”
Digital wallets such as AlipayHK are also an important means of transaction for this young demographic, with 86 per cent using this payment method – typically for purchases of less than HK$500.
“Rather than passively waiting for years to qualify for a credit card like millennials have done, Gen Z has been much more proactive,” says Lung. “They have turned to digital wallets to solve the barriers they face when it comes to in-store and online payments. I believe this habit will stay with them as they come of age.”
Based on a survey of 1000 Hongkongers, the report compares the payment habits of Gen Z, millennial and Gen X consumers and finds that while many perceive Hong Kong to be a laggard when it comes to smart payments, there is a genuine willingness to adopt new payment methods such as digital wallets – regardless of the consumer’s age.
“After years of complacency, the payments ecosystem in Hong Kong is finally waking up to the fact that cash might be knocked off its throne – or at least see its dominance challenged by a plethora of new payment methods,” says Lung.
Alongside the consumer survey, key players in Hong Kong’s digital payment industry were interviewed including Google Pay, Octopus Card, TNG FinTech Group, BBPOS Merchant Services, as well as online retailers such as Zalora and SkyMart.
The full report can be downloaded without charge here.