"Good-as-new" notes are gaining acceptance as Lunar New Year lucky money amid calls to protect the environment.
The government has been urging people to use used notes to avoid the environmental impact of printing new ones.
The share of "good-as-new" notes issued for Lunar New Year has increased from 20 per cent in 2006 to about 45 per cent in recent years.
"'Good-as-new' notes are perfectly suitable for lai see, as Hong Kong's notes are maintained at a high standard of cleanliness," the Monetary Authority said.
But many traditionalists still haven't got the message.
Long queues formed outside branches yesterday morning as banks started issuing notes for the festive red packets.
But some had to walk away disappointed from the HSBC Kwun Tong branch when it ran out of new notes at 10am.
The bank said it could only issue the "good as new" variety.
"Chinese people don't like using old notes for the New Year. Some old notes are wrinkled like preserved vegetables and have stains. I'll have to come again tomorrow," retiree Lo Oi-lan said on hearing the news after queuing for an hour.
Lo, who had planned to exchange HK$5,000, said new notes were easier to obtain last year.
Lum Yuet-wah, 72, exchanged HK$12,000 - a mixture of new and used notes - for herself and her two daughters but said she too preferred new notes.
"New notes are better for the start of a New Year, and you'll get the numbers in sequence," she said.
Others, including elderly couple Lee Wang and his wife exchanged HK$5,000 "good-as-new" notes to support the environment-friendly policy.
Customers were planning to give varying amounts, depending on when and to whom they were handing out the packets.
For family members, Lum said she would give HK$50 on New Year's Eve and HK$100 on New Year's Day.
Their close friends and neighbours would get HK$20 lai see, she said.
"You can't buy much with HK$10 now. But my husband and I will usually give HK$10 packets to our yum cha friends," she said.
"I usually give lai see to everyone who greets me. I won't give to those who don't," she said.
HSBC said the bank issued new and "good-as-new" notes and ensured that there would be enough notes in all of its branches.
Standard Chartered Bank said it had a limit of HK$500, HK$1,000 and HK$1,000 respectively for swapping HK$10, HK$20 and HK$50 for new notes.