Jake's View

Why use digital payments in Hong Kong when cash is quick and easy

Hong Kong is not just any city. Its unique urban environment encourages the use of cash where residents of other cities may find themselves ordering and paying over their smartphones

PUBLISHED : Saturday, 16 September, 2017, 9:13pm
UPDATED : Sunday, 17 September, 2017, 12:30am

Google Hong Kong’s “Think 2020: Smarter Digital City” white paper, released yesterday, found 81 per cent of Hongkongers surveyed perceived themselves as digitally savvy, but in reality, only 42 per cent were truly digital by using services such as mobile banking or online collaboration.

Business, September 13

I like that bit about it being a “white paper”, as if here we had an even-handed and authoritative government study of a public policy issue. The truth of it, of course, is that Google makes its money from advertising on the web and is therefore critically dependent on growing consumer use of digital devices to buy goods and services, while scorning cash transactions.

What a surprise then to hear that Google is in favour of digital payments rather than of cash. How sad that we in Hong Kong are not up to the mark. Surely we are under an obligation to improve our erring ways so that Google can make more money from advertising. White paper indeed. Score one for the Google shills on clever use of language.

‘Cash is king’ mindset is halting Hong Kong’s digital revolution, says top Google official

But Hong Kong is not just any city. Its unique urban environment encourages the use of cash where residents of other cities may find themselves ordering and paying over their smartphones.

If you live in a tiny flat on the 22nd floor of a building in a crowded urban district, then the street is your community. You go there to meet friends and do business. You also go there to shop because the shops and street markets are handy, as are the ATMs from which you can withdraw cash.

Most goods you want are also easily as cheap there as on the web, more readily available and in a wider visible range of offerings.

Try the Golden Computer Arcade in Sham Shui Po, for instance, which is packed with almost everything digital you could possibly want with quick expert help on hand and prices low enough to make Donald Trump glow in rage.

Cash has its advantages. You pay, you get your change and you go, quick and easy. And if you want to keep your transactions quiet, nothing beats cash.

I wonder about this sometimes in places that claim a proportionately high use of digital commerce. They don’t see the cash commerce. I have just come back from a holiday in Canada where, let me assure you, people are keenly aware that Tax Canada cannot steal what it does not see.

And now take the circumstances for web merchants in Hong Kong. They have to maintain extensive stocks in costly warehouse space, and their deliveries of individual packages are constrained by traffic jams and labour costs. They don’t really compete when customers otherwise need only take a lift journey down to the ground floor. It’s different on the mainland. Digital is easier when the shops are not so readily accessible, warehouse space is cheap and delivery is by cheap motorised tricycle.

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All this really tells you is that consumers in every environment adapt to what suits them best. Hong Kong is as advanced in digital commerce as Hong Kong needs to be, and there is no point in pushing it when the restraint is not ignorance but circumstance.

What I find truly ironic in all of this, however, is that the best example of digital commerce denied in Hong Kong is ride hailing apps, and they are denied to us because our government, which professes commitment to digital innovation, prefers to protect a HK$120 billion speculative bubble in taxi licences. The government created this bubble by artificially limiting the number of licences while setting fares too high. The speculators who own the licences control the crucial transport functional constituency seat in the Legislative Council. Digital commerce hasn’t a chance when politicians won’t reveal their true interests.

It is also beginning to happen in other economic sectors where social advances threaten established interests represented in functional constituencies. The public is willing, but the government is weak.