Hidden payment costs bite Hong Kong’s e-commerce margins

Most merchants lose up to 10% of their monthly revenue to payment failures, disputes, and processing delays.

Hidden payment costs are eroding the revenue of Hong Kong's e-commerce merchants, even as most remain optimistic about growth, according to Aspire's report.

The Hong Kong Ecommerce Pulse Check for 2025, based on responses from 100 merchants with annual revenue of $1m to $10m, found that 91% lose between 1% and 10% of monthly revenue due to payment failures, disputes and chargebacks, settlement delays, and the complexity of working with multiple payment providers.

These losses come in addition to processing fees, which 93% of respondents said they now account for at least 2% to more than 4% of revenue.

Payment-related losses are adding to existing cost pressures, with merchants citing slower consumer spending (32%), rising rents and logistics costs (32%), and inflation (31%) as the main challenges to their businesses.

Despite this, growth expectations remain largely positive: 32% of merchants expect revenue growth of up to 10% in the coming year, whilst another 32% expect growth of between 10% and 20%. Only a small proportion said they expect significant declines.

Instead of raising prices, merchants are adjusting how they operate. About 31% said they are shifting away from mass-market products into more defensible niches, whilst 73% are expanding their pricing range through a premium-to-value shift.

Others (44%) are moving sales from physical stores to online channels, and 23% are adding temporary physical formats such as pop-up shops.

Sales channels are also changing. Social media platforms, including TikTok, Facebook, Instagram, and Xiaohongshu, are now the main sales channel for 62% of respondents, ahead of traditional e-commerce platforms at 23% and livestreaming at 15%.

These channels also show the fastest acceleration, with 93% of merchants reporting an uplift in social commerce sales.

Looking beyond domestic demand, cross-border sales remain a key growth strategy. Southeast Asia was identified as a target market by all respondents, followed by mainland China (83%) and Japan and South Korea (63%).

However, merchants cited logistics complexity (51%), local marketing challenges (28%), and duties (18%) as the main barriers to regional expansion.