Consumption Voucher Scheme 2023: How can cash-reliant businesses leverage the cashless trend in HK?

A new round of consumption vouchers has been disbursed to 6.4 million HongKongers on Sunday via cashless platforms such as PayMe from HSBC and WeChat Pay HK. For the third consecutive year, this move by the Hong Kong government perhaps indicates the increase in acceptance of cashless payments in the Hong Kong consumption market since the pandemic.

This is further backed by a Visa survey titled Consumer Payment Attitudes Study conducted in August 2020 which revealed that cash payments have rapidly lost favour during the pandemic, with Hong Kong seeing a significant drop (-37%) in cash usage. Card-funded mobile payments (41%), credit cards (36%), contactless cards (36%), peer-to-peer (P2P) payments (35%) and non-card-funded mobile payments (31%) have all shown a significant increase in usage.

Post pandemic, it is safe to assume that these numbers may have increased slightly owing to the non-touch pandemic hygiene protocols that forced many to change their habits.

Industry players MARKETING-INTERACTIVE spoke to agreed with the phenomenon. Dharini Kannan Hemant, head of PayMe, HSBC, said: “Consumers have become more receptive to digital payments and online shopping, helping to drive cashless payment in Hong Kong.”

The fact that PayMe has grown its user base to over 2.9 million in Hong Kong since its launch in 2017 also proves how Hongkongers have embraced digital payments, added Hemant. “Higher digital payment adoption will create the critical mass for e-wallets in Hong Kong to enhance user experience and expand their merchant network, pivotal to the development of a cashless future in Hong Kong,” she said.  

Agreeing with her view was Ada Lau, brand director of WeChat Pay HK, who said there’s been a significant growth in the use of e-wallets and other electronic payment methods for better hygiene, convenience, and security over the past few years.

“The disbursement of consumption vouchers is indeed a catalyser that drives transactions for all. For example, at WeChat Pay HK, even after the consumption voucher is used up, we’ve witnessed a large portion of our users keep on using our e-wallet through top-up or binding with credit card,” she added.

The end of cash?

As more consumers adopt cashless payment methods, “cash is king” may no longer apply in Hong Kong. Lau said that businesses that only accept cash may miss out on potential sales and revenue. “With the ability to offer a range of promotional functions such as e-cash vouchers and e-stamps, it makes e-wallet operators a compelling alternative to traditional payment methods,” said Lau.

In addition, these businesses may face operational challenges, such as the need to handle and store cash, which can be costly and time-consuming, she added. “Businesses that are able to offer a range of payment options will be better positioned to meet the evolving needs of customers and succeed in the long term.”

Agreeing with her view was Giovanna Chan, senior marketing communications manager, Decathlon HK, who believed that digital payment will still be a strong trend in coming years, “Retailers that only accept cash might lose some business opportunities,” she added. 

Speaking on the bright side was Anson Shum, VP of marketing, SAUVEREIGN, who pointed out that true brand loyalty relies on trust that overcomes inconvenience, price disparities and logic, so a good brand will do well anyway with or without the help of consumption vouchers.

“I certainly wouldn’t just go to a restaurant because it accepts consumption vouchers. There are many other reasons why customers choose one brand over the others, we buy products that resonate with our own value and beliefs. Emotional connection is also very important when it comes to consumer decision-making,” he added.

Along this line of thinking, PayMe’s Hemant noted that apart from consumption vouchers, consumers still need to purchase daily necessities such as groceries and food from local merchants from cash reliant stores. “In this regard, I still believe consumers will spend wherever and however / by their preferred payment method, as and when they need to,” she added.

How can brands leverage the use of consumption vouchers? 

As Hong Kong is going increasingly cashless, the diversified payment options enabled by the consumption voucher scheme has indeed provided brands and payment channels lots of collaboration and engagement opportunities that benefit the retail sectors in Hong Kong, said Gian Chan, associate director at Sanrio Company.

“Brands can analyse the data and develop a comprehensive business strategy for merchants to help increase sales in the long term,” she added.

On the other hand, the re-introduction of the consumption voucher scheme can encourage business transformation. PayMe’s Hemant said such schemes give smaller businesses a good opportunity to adopt digital payments where they have not done so already - seeing as there are wider benefits to doing so in the longer term, including ease of payment handling and simplified operations, in addition to aligning more closely with the shifting customer preferences.

To leverage the use of consumption vouchers, WeChat Pay HK’s Lau said more and more merchants are willing to try new and innovative ways offered by e-wallet operators to effectively reach out to targeted group of consumers, “for example ‘social sharing coupons’ where users get to enjoy discounts only by sharing with their friends. This is also a good means of retail marketing.”

Related articles:

Survey: Over half of HongKongers spend consumption vouchers on non-durable goods
PayMe and BOC Pay to join next phase of consumption voucher scheme

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