Smartphone era forces Jetco to join market fight

ATM network provider teams up with member banks to build platform for mobile payments

PUBLISHED : Monday, 14 October, 2013, 12:00am
UPDATED : Monday, 14 October, 2013, 4:31am

The smartphone era's electronic payment possibilities have led Joint Electronic Teller Services to join the battle with other mobile payment providers.

Jetco, the largest automated teller machine network provider in the city, says it has teamed up with its 30 member banks to build a mobile payment platform using near-field communication (NFC) technology.

It expects five banks to launch the service by the first quarter of next year and hopes to be handling a million accounts in five years.

Leading banks are scrambling for a slice of an emerging mobile payment market which enables payments to be made by simply tapping an NFC reader with an NFC-enabled mobile phone.

HSBC and Hang Seng Bank launched their services last year. Last week, Hang Seng offered electronic coupons to boost spending through its service.

Bank of China (Hong Kong) said last week it had invited more than 100,000 clients to try out its mobile payment service, and Octopus Card followed with an announcement that it would be introducing its service on special SIM cards for smartphones.

"The need for people to draw money directly from ATMs could be declining on the back of increasing online payment and the use of electronic money," Jetco deputy general manager John Tsang Hin-kau said.

Jetco has about 2,200 ATMs in the city, more than double the number using HSBC's network.

However, it has reported slowing growth in use of the machines, with Tsang saying annual transaction growth rates had been in single digits in recent years, compared with 10 to 20 per cent decades ago.

"Our NFC technology service can help compensate for the potential declining use of ATMs in the future," Tsang said.

Mobile payment services provided by banks are currently only connected to credit card accounts, but Tsang said he expected saving accounts would also be connected.

The technology required for NFC can be costly and just how popular mobile payment will be remains to be seen.

Compared with HSBC, Hang Seng Bank and Octopus, which invested in their own individual platforms, Jetco's 30 shareholders - including BOCHK, Bank of East Asia, Standard Chartered, Wing Hang and Dah Sing - are sharing the HK$40 million cost of its platform.

Users of Jetco's service are provided with an external device that plugs into the earphone jack of a smartphone and can be used on any phone.

BOCHK said it would be the first bank to try out Jetco's platform this year, in addition to its own SIM- and memory-card NFC solutions.

Mainland visitors account for about 5 per cent of Jetco's business.

As a Hong Kong partner of China UnionPay, the leading bankcard association on the mainland, Jetco receives a fee from the mainland firm if a UnionPay card holder draws money from one of Jetco's ATMs in the city.

"About 5 per cent of our ATM transactions are from mainlanders, and it always rises to 10 per cent during long holidays," Tsang said.

The firm also has 400 ATMs in Macau and another 400 on the mainland.