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Apple Pay comes to Hong Kong, despite existing, more advanced payment systems

Apple Pay is up and away in Hong Kong, with American Express, Visa and MasterCard customers now able to use their iPhone or Apple Watch to make contactless payments in 10,000 shops and businesses. Since it uses the near-field communications (NFC) technology found in the iPhone 6/Plus (and later), and a finger scan to make a secure payment, Apple Pay is being marketed as cutting-edge technology, but is it?

Apple Pay still ties an existing bank account with a traditional bank to a phone, with no advantages except those faster contactless transactions. It simply digitises an existing bank card. In this region – led by mainland China – e-wallets, such as WeChat and Alipay, the technology used is more advanced.

“Asia has really led the way when it comes to mobile overall, and payments are no exception,” says Norm Johnston, global chief strategy and digital officer at media network Mindshare Worldwide.

“Arguably the WeChat app is the global poster child for seamless commerce integration … you can make payments, loans and can even apply for visas through the app.”

An e-wallet stores card details, travel documentation, even loyalty cards and other personal documents, says Stuart Thornton from payments processing technology company Worldpay.

“E-wallets work both online and in-store, making them increasingly relevant as consumers ditch their credit cards in favour of their smartphones to make payments,” the company’s vice-president, business development Apac, says.

Worldpay’s own research found that e-wallet transactions already account for the largest proportion of China’s e-commerce market. And the technology behind WeChat and Alipay that makes contactless payment apps such as Apple Pay seem old-fashioned.

“Method of payment is a very hot trend at the moment,” says Arnold Ma, digital marketing director at Chinese digital marketing agency Qumin. He cites last year’s Alibaba’s “Double Eleven” e-shopping event that featured promotions for certain products throughout the show that viewers could purchase with Alipay simply by shaking their phone.

WeChat has a similar tech-savvy approach.

“WeChat’s Sound Pay uses ultrasound technology to produce a unique sound wave, like a unique QR code,” says Ma. “If you use this next to a vending machine you can pay for your products from your phone.”

Other forms of digital payments are also being developed and tested outside the mainland. Johnston says Visa has launched an app that lets consumers take photos of other peoples’ clothes and then instantly order it for next day delivery, while “selfie pay” reverses that functionality by enabling users to authorise a payment by taking a selfie.

Biometric payment methods could also catch on; FingoPay links to a credit card and lets the user pay with a finger – no smartphone required. For wearable devices, smart homes and connected cars, such hands-free technology will be critical.

“I see invisible payments as one of the most exciting trends to look out for,” says Thornton, who suggests that smart cars, smart houses and smart offices all have the potential to contain an e-payment element. “This month, Alibaba unveiled its connected car, enabling drivers to pay for parking, fuel and coffee without leaving the vehicle,” he adds. “This has been a relatively untapped market thus far, but I see this as a huge opportunity.”

Meanwhile, back in Hong Kong, Apple Pay isn’t here to battle WeChat, but another, much more famous contactless card.

“Hong Kong’s payments space is becoming more competitive than ever, and it will be interesting to see how the Octopus Card fares against Apple and other market entrants,” says Thornton.

Octopus now allows users to pair their card with any Apple phone, and the O! ePay app allows Standard Chartered Bank customers to transfer funds to each other.

“That move may help it fend off the challenge from Apple,” adds Thornton. Apple Pay is also available in the US, UK, Canada, France, Switzerland and Australia. While Hong Kong may be similar to those Western markets in terms of banking infrastructure and a card culture, its proximity to the mainland – and the tactically early debut in Hong Kong of WeChat Wallet earlier this year – means that Apple Pay may struggle to keep up purely on technology.

“Apple Pay’s finger-scan tech is bad – I use it and it’s nowhere near as reliable and seamless as the QR format method,” says Ma, who thinks that Apple needs to be more innovative.

“Apple Pay may get its five minutes of fame, but it will never beat products such as WeChat Pay and Alipay, who have better tech and home advantage.”

(Alibaba is the owner of the South China Morning Post.)