Benefit Vantage is aiming to launch a new service in September they claim will eradicate the need for a username or password when a merchant is verifying the identity of a customer paying with their mobile phone.

It’s an innovation Tsang himself could have benefited from over the years.

“Many online merchants require you to set up a password. How can one remember so many passwords? Many people, including myself, tend to forget it within five minutes,” he said.

“When I was with the government, I relied on my secretary to help keep the passwords. It would be good to have a new way to log on with no need to remember any passwords.”

Tsang quit politics after he was defeated last year in his bid to become the Hong Kong’s chief executive. He has since ploughed his energy into the world of fintech and in June joined technology-focused merchant bank Ion Pacific as its vice-chairman.

His other big move in the sector saw him invest an undisclosed amount of money in Benefit Vantage to become its major shareholder. The company, founded by its president Harry Cheung Lup-sun, the other major shareholder, has just completed the second round of funding which gave it a valuation of about US$1 billion, according to Cheung.

Cheung, a Hongkonger who migrated to Australia in the 1960s and returned in the 1980s, founded Benefit Vantage four years ago.

“A lot of people cannot remember their passwords. The adoption of facial recognition or finger prints to identify customers is in fact affecting the privacy of the customers,” Cheung said. “We wanted to find a secure way for the merchant to identify the customer without compromising their privacy.”

Benefit Vantage has now created the technology it calls IPification, which allows telecommunication network providers to identify customers from their smartphone data. This enables the customer to use their smartphone to do shopping, or buy mobile games or other services with no password or username needed.

Merchants who want to use the service must pay a fee to Benefit Vantage, which in turn will pay a fixed sum to the telecom company, or share revenue with them.

Cheung said this charge would replace the cost merchants currently pay to send a security SMS containing a one-time verification code to customers making a mobile phone payment. These text messages amount to about US$1.25 billion every day, with each the telecom company charging US$0.001 per SMS. Benefit Vantage plans to charge about the same.

“I believe within three years, we could be able to capture 25 to 30 per cent of the business from the SMS,” Cheung said.

He said almost all the major telecom firms in Hong Kong, Macau and the wider region have initially agreed to partner with the company, and scores of merchants also want to sign up.

Tsang said these include many mobile games companies and e-commerce vendors.

The company would like to eventually roll out the verification technology beyond online shopping to the financial industry. However, lawmakers and stockbrokers believe it may need to undergo rigorous security checks by the regulator first.

Alvin Kwock Yin-lun, co-founder and chief executive of OneDegree, a fintech company which is applying for a licence to sell online pet insurance and other products, said he would be interested in the new mode of client identification if the charge was reasonable.

“Overseas experience has shown there are new ways to identify customers simply from their mobile phone number with no need for any password. This shows the technology is ready,” Kwock said.

Christopher Cheung Wah-fung, lawmaker for the financial services sector, said brokerage firms currently require two levels of client identification, which makes life complicated.

“The investors would like an easier way to identify themselves when they conduct online stock transactions. However, the new identification system would first have to prove it is secure,” he said.

A spokesman for the Securities and Futures Commission declined to comment.