Hong Kong halts e-wallet auto top-ups after user reports of missing funds
- In a major disruption to the city’s plan to develop into a smart banking centre, the HKMA says it has ordered the shutdown of top-up features using the Faster Payment System to Octopus and other stored value cards
Hong Kong’s smart banking push got a big slap down after the Hong Kong Monetary Authority ordered e-wallet operators to suspend auto transfers via the recently-launched Faster Payment System to top-up Octopus, and the Hong Kong units of Alipay and WeChat Pay, after a number of fraud cases came to light.
The suspension order, unveiled Wednesday evening, came after the HKMA found a number of customers had suffered a combined loss of HK$180,000, with most cases involving several thousands of dollars in losses, via the Faster Payment System. The biggest single amount was about HK$100,000, a spokeswoman said.
The HKMA order comes just three weeks after the service was introduced.
“The incidents are now being investigated by the police,” the spokeswoman said. “The HKMA has requested all e-wallets operators to suspend the electronic Direct Debit Authorization (eDDA) for automatically top-up via the Faster Payment System until they can find way to review the procedure.”
She added that three complaints, involving theft of personal data, had been received since the launch of the new payment system.
Two of the complainants believe their personal data, including Hong Kong ID numbers, had been stolen, perhaps from data they had submitted when applying for jobs.
The stolen identity numbers were then used to set up accounts in different e-wallets, enabling top-up transfers from different banks.
The revelation is a big setback to the HKMA’s effort to promote smart banking that would eventually turn Hong Kong into a cashless financial hub.
The authority launched the faster payment system on September 30, enabling 21 banks and 10 stored valued facilities to conduct immediate fund transfers, top-up of e-wallets and other cashless point of sale transactions.
The HKMA order will restrict the automatic top-up function from banks to the 10 stored valued facilities. This will affect Alipay Hong Kong, WeChat Pay Hong Kong, Octopus and HKT’s Tap & Go mobile wallet.
These e-wallets however can still be topped up from credit cards or by individual fund transfers.
Other interbank fund transfers via the faster payment system are not affected by the restriction.
Also not affected is PayMe, HSBC’s popular fund transfer app, as the app has yet to join the Faster Payment System, according to a HSBC spokeswoman.
“Security and customer protection is our top priority. The reported incidents are only related to using bank accounts to top up store value facilities’ e-wallets which have taken part in Faster Payment System (FPS),” the HSBC spokeswoman said.
“The incident is not a breach of the security of Tap and Go system,” according to a spokesman of HKT, which operates the service.
“Pursuant to the request of the Hong Kong Monetary Authority, we are reviewing the relevant procedures to reduce the risk of personal data theft. In the meantime, the eDDA function of Tap & Go e-wallet has been suspended,” he said.
A spokesman for Octopus said: “In response to the request by the HKMA, Octopus Cards has temporarily suspended the O! e Pay eDDA service and is reviewing existing procedures to minimise the risks associated with identity theft.”
“Although the O! ePay eDDA service has been suspended, customers can still transfer funds from their bank accounts to top up their O! ePay accounts instantly through registering for the addressing service of the FPS with their mobile phone numbers via their online banking” to help the customers have a better understanding in the service available.”
Alipay is the mobile payment service operated by Ant Financial Services which is affiliated with Alibaba Group Holding, parent company of the South China Morning Post.