Faster Payment System (FPS) Explained for Hong Kong

Overview of the Faster Payment System (FPS), or “轉數快” in Chinese, and the opportunities this digital payment infrastructure offers for ecommerce merchants, small businesses and established brands for offering better customer service

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On 30 September 2018, Faster Payment System (FPS), or “轉數快” in Chinese, became available to consumers in Hong Kong using the initial 21 banks and 10 stored value facility (SVF) operators enrolled in the program. This digital payment infrastructure, endorsed by the Hong Kong Monetary Authority (HKMA), opens a wealth of opportunities for Hong Kong retailers online and offline. Below, we will outline the features of FPS and also highlight considerations for SMEs and global brands in Hong Kong for business growth.

How Faster Payment System for Hong Kong Works

FPS has been adopted by many major banks such as HSBC, Hang Seng Bank, Citibank, Standard Chartered Bank, Bank of East Asia, Bank of China (Hong Kong), and DBS, as well as digital wallet, or SVF operators. SVFs, which have stored value facilities licenses issued by the Hong Kong Monetary Authority, are more commonly known as digital wallet operators, which include TNG Wallet, Alipay, WeChat Pay, PayPal, and the Octopus Card. The system supports instant and free digital payments in HKD and RMB, replacing more traditional transfers that could take several business days to process.

In addition, payments can be made by users without bank account details. Instead, users can send payments using mobile phone numbers, e-mail addresses, unique QR codes or an anonymous FPS identifier. Both individuals and businesses can register for FPS to send money, but businesses should note that they may need an additional app to collect FPS payments from customers, such as the HSBC Business Collect App for merchants using HSBC accounts. Merchants should check whether their respective banks offer FPS and the details of setup and also whether there are any transaction handling fees for business accounts.

Benefits and Limitations

FPS unlocks digital payments for consumers to make instant, and free transfers between local bank accounts and digital wallets. This consumer-friendly infrastructure has benefits for merchants such as some cases below:

  • instant deposits into a merchant bank account
  • cross-platform payment collection between banks and digital wallets
  • HKD and RMB collection to serve Hong Kong and China consumers
  • digital transaction records for easier accounting
  • potential for convenient POS QR code scans (if a merchant’s bank has supporting software)

Using FPS to Reduce Payment Friction and Increase Ecommerce Sales

The online shopping cart abandonment rate was 75.6% in Q1 2018, according to Statista. Payments are a critical part of shopping experiences that should be factored into an store design, not an afterthought. With the FPS offering a direct bank transfer through a QR code, online merchants will be able to offer an instant payment option for consumer convenience and without processing delays for merchants. Merchants should consider how integrating this mobile-friendly payment option can be woven into their existing online and offline customer checkout flow.

Where FPS may have an even greater impact is for in-store shopping, where more than 70% of surveyed customers by SmallBizTrends said that checkout and payment experience was their biggest pain point. By adding a QR code that allows customers to do a quick scan may help reduce processing time when counting change or printing credit card receipts without the need of another POS hardware device.

Businesses with a mix of online and offline components, such as events or classes, can also benefit from a smoother payment process. Currently in Hong Kong, customers purchasing event tickets may have a multi-step signup, registration, payment transfer, and confirmation process that requires waiting. For a business, sometimes collecting or reconciling payments and issuing tickets or registration confirmations are an administrative burden. Instant digital payments with FPS can remove friction for both a customer and merchant through an instant, recorded transaction that ties a payment with registration.

How can you offer FPS for your business?

Merchants should check with their bank to see if they have participated in FPS and whether it is available for commercial banking. For example, HSBC allows merchants to make and receive bank transfers via FPS once they have registered and linked their phone number, e-mail or FPS ID. Businesses can also accept FPS payments using HSBC Business Collect, the bank’s payment collection platform where businesses receive mobile payments with a QR code scan. HSBC is offering a transaction fee waiver promotion offer from 30 September 2018 to 31 December 2018.

Merchants should note that the payment system only works for banks and SVF operators in Hong Kong. Users cannot send money to foreign accounts, although customers with local Hong Kong accounts can send payments from anywhere in the world. Nonetheless, FPS is a building block for seamless payment and simplified business administrative processes that improve customer shopping experiences.

Merchants should test this new payment system to see how it can help simplify order processing and business operations in order for a business to invest more time in creating better customer experiences.

Enabling FPS on Your Digital Platform

Currently, FPS requires integration with banks or SVF operators in Hong Kong. Ecommerce platforms such as Shopify or Magento and payment gateways such as Stripe currently do not have direct access to FPS. However, merchants using ecommerce platforms can develop workflows that incorporate FPS into their payment options and order fulfilment processes.

If you’re looking to implement FPS capabilities and are looking for a technology provider to help, please get in touch!