Hong Kong’s Small Merchants Hustle to Keep Up with Digital Payment Trend
At a fast-food stall near the University of Hong Kong, stickers for various payment methods cover the counter, as Carmen Yung, the store owner, quickly handles a queue of Octopus taps, QR code scans, and cash exchanges to keep up with customers’ requests.
Her stall accepts seven payment options, including WeChat Pay, Alipay, PayMe, BoC Pay, Octopus, Apple Pay, and cash. “It’s really for the customers’ convenience,” she said. “Everyone uses different payment methods these days.”
As more customers choose to go cashless, merchants across Hong Kong feel compelled to offer as many options as possible to meet different preferences. But for small businesses, providing customers such convenience often comes with a set of challenges.
The problem stems from the city’s increasingly fragmented payment market. At least 15 e-payment platforms have obtained licenses from the Hong Kong Monetary Authority, each operating with its own system and charging rules. For small shops operating with limited manpower and a thin margin, juggling multiple systems can be costly and complicated.
Lily Wang, one of the owners of Lily Bookshop in Sheung Wan, said the system doesn’t operate in favor of small businesses, as transactional fees can easily eat up their profits.
For each transaction, Wang pays a 1.5 to 2 per cent fee to the payment platforms. “If someone only buys something for 20 or 30 HK dollars, and then the platform takes a cut, that’s a real loss for us,” she said.
To avoid that, Wang encourages customers to use cash. She displays a notice at the counter for customers to see the charges for each platform. “Some don’t care,” she said. “But we are already struggling to survive. We have no choice.”
System glitches also cause trouble. “At least three times, the customer walked away, but the payment was never received,” she recalled.
Wang’s experience reflects a broader issue: despite years of government subsidies and promotions, Hong Kong’s small merchants still remain slow to adopt digital payments.
As of December 2024, only 2,225 out of 11,147 public market stalls managed by the Food and Environmental Hygiene Department had installed WeChat Pay, with Alipay available at 1,793 stalls and Octopus at 992 stalls.
Emil Chan, co-chair of the Hong Kong Digital Finance Association, sees this as a structural problem rooted in the lack of a unified regulatory framework.
“In Hong Kong, there’s no government body responsible for regulating competition or setting unified standards across platforms,” Chan said. “This has led to the emergence of a dozen payment systems that don’t connect with each other.”
These incompatible payment systems result in small vendors having to open separate accounts or rely on intermediaries to process payments, which raises costs and complexity.
Large corporations have the resources to support a dozen platforms and cover the fees. But for small businesses, it becomes a real burden. It’s simply unfair.
He pointed to Thailand’s PromptPay as an example of a better approach: a unified system provided by the central bank that allows any merchant with a bank account to accept payments at a low cost.
“The situation won’t change unless the government addresses the issue at the infrastructure level,” he added. “Hong Kong’s outdated systems are too deeply rooted, making digital transition especially difficult for SMEs.”