Your Wallet: The Next Digital Battlefield

(This article originally appeared in the EJ Insight on Sep 2, 2014)

Hong Kong is rightly proud of the Octopus contactless card payment system. In 15 years it has gone from being used to pay for train and bus trips here to becoming Hong Kong’s ubiquitous electronic cash wallet, accepted by tens of thousands of retailers while also being the model closely followed by public transport operators in London and The Netherlands.

The Octopus system is a classic case study of how the creation of a superior customer experience has enabled the development of an entirely new market.

Time, however, is no respecter of reputation or technology. While Octopus Cards Ltd has stumbled in recent years over a couple of issues, its success has attracted keen interest from banks and telecommunication companies that would like a piece of the e-cash action.

Credit card payment services American Express, Mastercard and Visa have all rolled out contactless payment card systems for small purchases, leveraging near field communication (NFC) standards, and these are starting to be applied in Hong Kong in innovative ways.

HSBC was first to break cover, introducing a system in 2012 that enables its Visa card holders to turn an Apple iPhone into Visa payWave contactless payment device. Hang Seng Bank and Bank of China are among other banks that have jumped on the bandwagon by launching their NFC payment offerings last year. Whether these alternative e-wallet systems can make serious inroads into Octopus Card’s market remains to be seen.

The Hong Kong Monetary Authority is, however, promoting the development of a fully-interoperable NFC mobile payment infrastructure and the credit card companies are pushing contactless payment terminals to their merchant customers. Mastercard alone claimed 3,000+ PayPass locations in Hong Kong early this year but, by comparison Octopus, had around 67,000 card readers out there being used by 6,000 service providers.

Standardization and institutional support are obviously a big help but at the end of the day, market disruption is activated and driven by customers. Therefore, ultimately, the success of these Octopus alternatives will depend on how well they craft engaging customer experiences.

IBM C-suite study found that 54% of CxOs now believe customers must now be engaged as individuals rather than as categories or market segments. In recognition of changing customer expectations, these executives are rebalancing priorities for the next three-to-five years, with customer experience management getting the biggest boost. (

In doing so, the objective is to create something disruptive and transformational, just as Hong Kong public transport companies did back in 1997.

Of course you don’t need statistics to know that, for very many people, smartphones are among the most personal and digitally dynamic things in their lives. In some ways they represent the ultimate fusion of the physical and digital realms. It follows, therefore, that adding e-wallets smartphones creates a new dimension with huge potential in terms of enhancing customer experience and engaging them as individuals.

So, let that battle of customer-centric mobile payment innovation begin!

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