They're opting to swipe their debit cards instead.
It would seem like Hong Kongers are getting increasingly spooked by credit card use if the recent Global Payments Report 2016 is anything to go by. Despite credit cards being the most popular online payment method this year with a 53% market share among consumers, it was found out that credit card payments are predicted to decline by 9.3% come 2020. Hong Kong consumers are becoming more credit wary, as other modes of payment which give them greater control over their finances such as EPS cards, debit cards, and bank transfers are expected to rise.
The predicted decline in credit card use can be blamed on a number of factors. Phil Pomford, general manager Asia Pacific, Global eCom at Worldpay says that the International Monetary Fund predicts that China’s economic growth will slow to around 5.8% by 2021, with Hong Kongers already feeling the pressure of record retail declines as Mainland Chinese shoppers choose to shop at home. “This atmosphere of sluggish spending and financial uncertainty may be spurring Hong Kong shoppers to refrain from riskier, credit-based spending and instead choose debit payment options,” he adds.
In 2015, Hong Kong consumers swiped their debit cards for 126m transactions and resulted to a whopping US$273b spend on retail and bill payments. The report also added that debit card usage is predicted to jump by 5 percentage points over the next few years. It will eat up 12% of Hong Kong’s total online payment market share by 2020. Online shoppers were also found to be more comfortable paying for their purchases via bank transfers. This mode of payment is predicted to reach 17% of the market share in Hong Kong. Prepaid cards and e-wallets will see incremental rises as well, with e-wallets jumping from 11% market share this year to 12% in 2020, equalling that of debit cards.
Pomford points to convenience as a factor in consumers shying away from swiping credit cards and choosing debit cards instead. For instance, with an EPS ATM card, consumers can pay bills and taxes at convenience stores. “EPS cards are growing in popularity due to their ease-of-use and frequent, enticing promotions, so it’s a natural progression to bring the EPS debit payment method online,” he explains.
Hong Kong’s e-commerce market is predicted to be affected as e-tailers struggle to attract cautious customers and adopt the right payment technology. The report forecasts that Hong Kong’s eCommerce segment will grow by just 10% in the next few years, hitting US$13.8b in 2020, and making the country a laggard as China and India grow by 15% and 28% per year respectively.
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