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The Hong Kong Productivity Council (HKPC) released its “Enterprise Digital Payment Landscape Study,” shedding light on the current state of tech-driven payments in businesses. The survey, conducted independently by HKPC and sponsored by an American multinational financial services corporation, delves into key trends and opportunities arising in the digital payment sector, providing valuable insights into the underlying forces driving these shifts.
The study revealed that business-to-consumer (B2C) enterprises are at the forefront of digital payment adoption, accepting an average of 4.1 digital payment methods out of 5.6 available options. Among these, Faster Payment Systems (FPS), credit cards, and Mobile QR dominate, with adoption rates of 70%, 67%, and 61%, respectively. On the other hand, business-to-business (B2B) enterprises still have room for growth, as they accept only 2.1 digital payment methods on average.
The study found that 51% of B2C enterprises in Hong Kong expressed satisfaction with their digital payment tools’ overall performance, compared to 41% of B2B enterprises. Both sectors, however, stand to benefit from the development of cross-border and multi-currency payment acceptance.
Analysing the results based on business nature, B2C enterprises have made significant strides in digitalising payment methods to cater to local consumers’ needs. Their satisfaction is driven by the efficiency and traceability offered by these digital payment tools. However, there are still challenges for B2C enterprises, such as limited options for cross-border consumer payments, which hinder expansion into new markets. Enhanced payment security is also a top priority for these enterprises.
When it comes to corporate and supplier payments, traditional methods like wire transfers, cheques, and in-person bank transfers continue to dominate. Cross-border payments are mostly handled through online wire transfers. The study revealed that B2B digital payment tools face dissatisfaction due to underperformance in cross-border payment handling, limited acceptance of multiple currencies, and concerns about transaction safety.
The General Manager of HKPC’s Digital Transformation Division highlighted the rapid digitalisation of payment methods in Hong Kong, driven by e-commerce and changing consumer behaviour. Notably, “new” digital payment tools like FPS and Mobile QR are widely adopted by B2C enterprises for local consumer payments. However, corporate payment digitalisation lags behind.
It is hoped that tech innovations such as blockchain, digital currency, and smart contracts will advance the payment industry, providing more options for B2B payments. Enterprises call for greater payment optionality, with 70% supporting customers’ freedom to choose payment methods regardless of transaction size or merchant. Additionally, there’s a pressing need to expand cross-border payment options for both B2C and B2B enterprises, facilitating international expansion with seamless and efficient payments.
Regarding enterprises’ plans to improve their payment tools, the survey revealed that 74% of respondents are either implementing or considering changes to their payment and receivable methods. Enhancing transaction security (62%) and expanding the range of payment methods (53%) emerged as the primary areas of focus for the next two years. Among the remaining 26% of enterprises not planning changes, half of them believe they would be motivated by collaborative efforts from all stakeholders in the financial ecosystem.
In terms of technology, the emphasis on enhancing transaction security indicates a keen interest in adopting advanced security measures, such as encryption, biometrics, and tokenisation, to safeguard payment processes from potential threats.
Furthermore, the drive to increase the number of payment methods highlights the importance of leveraging various digital payment technologies, including mobile wallets, contactless payments, and fintech solutions, to offer customers a broader range of options and enhance overall payment convenience.
The importance of increasing payment options for enterprises and meeting expectations for secure and seamless transactions was highlighted. The need for advanced digital payment tools with enhanced security and multi-currency acceptance, requiring collaboration within the financial ecosystem was also emphasised.
Businesses are urged to embrace new payment tools openly, as some B2B enterprises were hesitant to adopt them despite calling for more options. Optimistically, around two-thirds of surveyed enterprises believed Hong Kong could become cashless in five years, with collaborative efforts promoting digital payment development and driving societal digital transformation.
The survey used a virtual credit corporate card as a proxy to gauge enterprises’ awareness of new digital payment methods and their preferences regarding these features. The results showed that despite low awareness, enterprises value the fintech-driven advantages offered by virtual credit cards. These benefits include cost savings for overseas remittance, real-time expense reporting and analysis, and the ability to pre-set credit limits to avoid cashflow problems.
