Mobile payments

Hongkongers will soon be able to use phones in place of Octopus cards

Local e-payment giant to offer tap-and-pay functions on newest Samsung phones, as battle with mainland competitors heats up

PUBLISHED : Monday, 11 December, 2017, 8:42pm
UPDATED : Monday, 11 December, 2017, 10:58pm

Octopus has made a big play in the battle with its legion of e-payment competitors, joining forces with Samsung to offer smartphone functions that will allow Hongkongers to use their phone in place of their Octopus card.

Through mobile wallet app Samsung Pay, and select Samsung smartphones, Octopus users will be able to pay for local travel, small purchases, or get in and out of residential estates using their handset.

Previous Octopus smartphone apps did not have tap-and-pay functions.

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The near-ubiquitous card has been an essential part of life in Hong Kong since it was rolled out in 1997 for payments on public transport. It now covers a plethora of different payments, from haircuts to hospital treatment, and the company claims to process more than 14 million transactions valuing more than HK$189 million on an average day.

And from this month, instead of holding their Octopus card to a scanner at MTR stations or convenience stores, users will be able to scan their Samsung mobile.

First they will have to link the card with the phone through the Samsung Pay app, using the phone’s near-field communication (NFC) function. The card will then deactivate and no longer be usable, with card value and reward points held in the app.

Users will be able to top up their Octopus accounts with cash at convenience stores or MTR stations or – in a first for Octopus – using credit or debit cards.

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However, the minimum amount to add through the so-called Smart Octopus system will be HK$300 and there will be a 2.5 per cent service fee. The service will be available from December 14 for users of Samsung’s latest smartphones, Note 8, S8 and S8+.

Octopus chief executive Sunny Cheung Yiu-tong said: “We believe Smart Octopus will become the new norm to smartphone users seeking greater convenience while carrying less.”

According to Samsung Hong Kong vice-president Zhao Yiyin, both companies had been working on getting Octopus on Samsung smartphones for about a year.

The option of using Octopus as a tap-and-go smartphone payment method, combined with the option of topping it up with credit card, suggests that the company is getting on a level playing field with its competitors, such as Tencent’s WeChat Pay and Alipay, both from mainland China.

Alipay is a unit of Ant Financial Services Group, an affiliate of Alibaba Group Holdings, which owns the South China Morning Post.

Both WeChat Pay and Alipay – like most mobile wallets – use QR code scans rather than NFC. And one local analyst said Octopus’ choice of technology would give it an edge in its usual use, by commuters.

“The advantages of using Octopus versus using QR codes is that you can’t go into the MTR using the QR code – it’s not fast enough,” Francis Fong, honorary president of the IT Federation, a local trade association, said.

“You may be able to wait 15 seconds in 7-Eleven to buy something, but you can’t wait 15 seconds if you’re at the MTR [turnstiles].”

Last month, Octopus – majority-owned by the MTR Corporation, which runs the city’s subway system and runs real estate at its stations – launched its own QR code-based payment service.

Fong added that Octopus was playing to its strength of tap-and-go payment, adding that any new entrant into the market would struggle to compete with the company’s established network of 21,000 Octopus payment terminals.

Octopus technical director Sammy Kam Chi-sum would not say whether the service would be extended to Apple users through the Apple Pay mobile wallet app.

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But Fong said getting Octopus functionality into Apple smartphones would not be complicated, since the FeliCa chip that allows Samsung’s latest smartphones to be used like Octopus cards is also in the latest Apple models.

FeliCa was developed by Sony and first used in Octopus cards for their main tap-and-go payment function. It is also compatible with NFC on mobile devices.