HK Magazine Archive

Why Are There No Debit Cards in Hong Kong?

PUBLISHED : Friday, 24 June, 2016, 11:18am
UPDATED : Wednesday, 19 October, 2016, 5:14pm

It’s not that there aren’t debit cards in Hong Kong. They’re just not the debit cards you might expect.

Overseas, debit cards are commonplace—linked by Visa or Mastercard to your checking account, and deducting the cash directly. You can use them in shops, online and internationally. Good luck doing all that with just your HSBC ATM card. In fact, few banks in the city offer the simple, universal debit systems ubiquitous in the west. Why?

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There’s no single explanation, but a set of factors unique to the city that have converged to produce this somewhat less convenient way of life.

There is a debit system in Hong Kong, of course: EPS, founded in 1984 by a consortium of 21 Hong Kong banks to provide a convenient, cash-free way to pay in shops and supermarkets. Couple that with easily available cashback and the fact that we can pay our bills and even our taxes via EPS in a 7-Eleven, and our debit spending is in fact pretty high: Last year we made 126 million transactions on debit cards in Hong Kong, spending $273 billion on retail and bill payments.

Problem is, EPS is exclusive to Hong Kong, so you can’t use it overseas—and it’s not like you can use it universally in Hong Kong either. Try paying for a meal at Otto e Mezzo by EPS and you’ll be washing dishes in the kitchen until the end of time.

Meanwhile in China, the China Union Pay system rules supreme and is much more widely accepted than Visa or Mastercard. As banks in Hong Kong increasingly head in the direction of that mainland cash, there’s less reason for them to want to adopt more western systems.

Then there’s Octopus: launched in 1997, this pioneering stored-value card is easier to use than any debit card or indeed cash. And when it’s safe to say that pretty much every single person in Hong Kong has at least one, and cards can be linked to accounts to auto-top-up, the need for an individual debit card seems less pressing.

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And, of course, there’s this: the banks love credit cards, because you’re paying them huge amounts of interest for the privilege of not stumping up all the cash up front. When you could charge 35 percent APR on someone’s new Xbox One, would you be inclined to offer them a cheaper, more prudent way to spend their cash? Not likely. In this city of finance, everyone’s got an angle—your bank most of all.

So it’s actually Hong Kong’s pioneering use of Octopus and EPS, the rise of the Chinese economy and our own banks which all go towards the fact that the western conception of debit cards has never really taken off. And that’s not to mention that for many purchases, the city loves its cold, hard cash—and, as the ads tell us, for everything else, there’s Mastercard.