Hong Kong on the cusp of a cashless economy as digital payments boom

QR codes are increasingly being used to pay for goods in Hong Kong. Image: @Supitnan17 via Twenty20

Cash payments are in a steep decline in Hong Kong as consumers prefer to go digital, both online and in-store, a new report by FIS finds.

The 2021 Global Payments Report by Worldpay from FIS, which examines current and future payments trends across 41 countries, found that the pandemic has accelerated the use of digital wallets versus cash at point-of-sale (POS) in Hong Kong.

Hong Kong’s e-commerce market is also projected to snowball over the next four years from US$21 billion to $29 billion.

Cash use in Hong Kong at the POS declined by 17 per cent from 2019, accounting for just 9 per cent of in-store payments last year and is forecast to decrease rapidly over the next four years to comprise just 1.6 per cent of transactions in 2024.

Credit cards are the preferred in-store payment method, accounting for 56 per cent of transactions last year and retain this position until 2024.

The overall POS market in Hong Kong is forecast to increase by almost 27 per cent over the next four years to reach US$236 billion.

Digital wallets will be the fastest-growing in-store payment method, projected to account for 36 per cent of transactions by 2024, increasing from 22 per cent last year. 

Meanwhile, the most popular online payment methods last year were – credit cards (45 per cent), digital wallets (29 per cent) and bank transfers (11 per cent).

Digital wallets are projected to overtake credit cards as the most popular online payment method in Hong Kong by 2024, accounting for 37 per cent of transactions.

Prepaid card and charge and deferred debit cards are projected to be among the fastest-growing online payment methods in Hong Kong, increasing by 18 per cent and 22 per cent annually, respectively. They are forecast to account for 6 per cent and 3 per cent of online transactions by 2024.

“We are approaching a new frontier of digital commerce, and Hong Kong is leading the charge across the region as they accelerate cashless payments,” said Phil Pomford, GM APAC, Worldpay Merchant Solutions at FIS.

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