Research on New Digital Payment System

Research project - To examine whether the residents of Hong Kong trust digital payment

Executive summary

The aim of the paper is to research and analyze whether the citizens of Hong Kong trust the new digital payment system. The research took place with the objective to know the thinking of the people of Hong Kong. Hong Kong is one of the most developed city in the world with new technology developed taking place every day, thus it was important to know the perspective of people about the new digital payment system. Primary and secondary research method was used to find the result by asking questions to the businessmen and consumer stores of Hong Kong. This helped to know that the people of Hong Kong has started trusting the new payment system due to its various advantages. 


Digitalization is the new trend in today’s world as the people are becoming more used to internet for their day to day usage and activities. This shows that the use of non-digitalization sources have gone down tremendously over time (Benner 2017). Similar situation is seen for the payment system as people are becoming more cashless day by day as they are moving from a cash payment system to a digital payment system. This is one of the way in which the payment system has been made automatic and people nowadays does not need to carry cash in hand in order to make payments. Life has become easier with such as payment system. There are various types of digital payments such as online payment, mobile POS payments processed, digital consumer commerce transactions, card payments and others (Benner 2017). However, the acceptance of such payment system differs from country to country as it is greatly influenced by their culture. 
    Hong Kong’s involvement in digital payment is also influenced by the type of culture they maintain there. Hong Kong is not only considered as a city, it is one of the biggest hub for all types of newly developed goods. Thus, payment system plays a major role in the city due to its daily huge transactions which is difficult to make with cash. However the city still encourages the use of cash in making transactions rather than using smartphones for making payments. The city is largely dominated by the mindset that cash is the biggest asset and it is difficult to survive without it (Chan, and Lee 2015). There are large proportion of ATM in the city at every area so that they do not face much problem in withdrawing cash for their daily needs. However, other cities and regions has accepted the digital payment system in a large way. 

Research Question and Objectives

Primary Question:
?    Whether the residents of Hong Kong trust digital payment and their views regarding the same?
Secondary Questions:
?    What is digitalization?
?    What is digital payment?
?    What is the scenario of Digital payment in Hong Kong?
Objectives of the Study:
?    To analyze the thinking of people of Hong Kong regarding digital payment
?    To analyze the changes made in the city in payment system compared to past scenario
?    To analyze the way people in Hong Kong presently think about digitalization

Literature Review 

What is digitalization? 
    According to Benner (2017) digitalization is a process of incorporating technology and its efficiency in the day to day activities of the people in almost everything that can be digitalized. In other words it also means the growing infusion of digital aspects in all facets of work and economy. Such technology is not entering and affecting the workplace and personal life, it is also affecting the economy as a whole (Feng 2017). The acceptance rate and the thinking of people regarding digitalization differs from people to people and also among regions. It also differs due to the culture aspects of a region which plays a great role in the behavior of the people to accept a particular technology. The differences in the acceptance level of digitalization is also prevalent because of the economic situation of the economy. This is because it has been pointed out by Timonen and Vuori (2018) that the process of digitalization causes a constraint in the growth prospect of the economy during boom period. However, digitalization in an economy takes place in various spheres such as workplace, payment system, personal house work and others. It has been seen that digitalization has grown significantly in the workplace culture as technologies are growing and entering in individuals work practices. 
What is digital payments?
    Digital payment is yet another area where digitalization has made its place and it impacts the daily life of the people while making day to day transactions. Digital payments are referred to those payments that are made with the help of certain instruments (Luther 2016). However the instrument that is used in making digital payment is not cash. It is an umbrella of many instruments which are not a part of any physical instruments. It is an umbrella of different types of instruments which is used in different forms for making payments. It is the scenario in which technology is infused in the system of payment and forms a part of the ecosystem or development. Henningsson and Hedman (2014) in their paper has stated the evolution and growth of digital payment in the future. It was stated that the digital payment system is most likely to increase in the future. The reason being the rise of online shopping in today’s world and the convenience such digital payment system offers in the face-to face payment modes. On the other hand it has been further explained by Zheng et al. (2016) that the digital payment system is also one of the best way to pay from far away distances. This is the main benefit of digital payment instruments. It assist in making payment from any corner of the world. However, similarly like digitalization, the acceptance rate of digital payment system also differs from region to region. 
Digital payment in Hong Kong
    Hong Kong is known as one of the most developed economy in terms of technology as it is constantly involved in bringing new technological innovation in all kinds of spheres. Similar kinds of innovation is also taking place in its financial technology market in which there has been introduction of digital payment system (Chan and Lee 2015). It came up with the new stored value facility in which the people can store their money and use it for making various types of payments. This can be done with the help of smartcards. This system was introduced in 2016 with the aim of transforming the landscape of Hong Kong. However, Bátiz-Lazo and Smith (2016) argued that before the introduction of such a system people of Hong Kong were relied fully on the physical payment system. Thus, they found it difficult to adopt this system as they are much happier and comfortable with the payment system they already use. The companies of Hong Kong on the other hand was getting engaged in the digital payment system. This was clear from the evidence that more than 20 companies in the city applied for SVF license which formed 50 percent of the total domicile companies and about 68 percent applied for pre-paid card system. 
    Further to contradict the statement that the people of Hong Kong does not support the digital system, it has been successfully argued by Yan and Yang (2015) in their findings that internet has successfully entered in the commerce industry of China. There are about a total of 80 percent of the population that are engaged in the internet and maximum of the percentage is coming from Hong Kong. Mobile payment system which is one of the most common digital payment system is seen to grow at a faster rate in Hong Kong. The population use it for various activities such as account enquiry, transfers, bill payment, shopping and others. Yan and Yang (2015) also found a disagreement to digitalization from the people of Hong Kong and the entire China in their findings. People in the city were also uncertain of using the mode of payment initially as there is some risk attached in using mobile payment. These risks are the risk of virtuality and control factors. This make the consumers feel uncertain and unsafe of whether their account will actually be protected in these mobile payment (Swartz 2017). Thus, there is a trust issue prevalent among the users which has set them back in using the digital instruments of payments. 
    Thus there is a mixture of acceptance seen in the people of Hong Kong which increases the challenges of making them feel safe about the newly introduced payment technology. 


The research method that was used for finding the preference of people of Hong Kong towards digital payment system was a survey method. This is because it is one of the best method to collect data and analyze a large population at a time. However sampling method was used to carry out the survey on the population and an analysis helped to know the mind set of Hong Kong people towards digital payment system (Taylor Bogdan and DeVault 2015). This method involved interacting with the people of Hong Kong mostly the business owners that are involved in daily payments and few consumer selling stores. These people are chosen for the survey because they are the most known and influential people to provide the best data for the survey because they face the situation every day in their business (Flick 2015). 
    For the data collection, the manager and accounts department of the chosen business and consumer stores was interviewed (Alameda-Hernández et al. 2014). It will be a primary research in which raw data will be collected for further analysis. A secondary data analysis was also conducted by reviewing the works of the past literature (Hewson and Stewart 2016). The interview continued for 15 mins in which they were mostly asked closed ended and open ended question in which their response was recorded. The interview was a face to face interview in which the interviewer was able to analyze the response given even more closely. Interview method is an ideal way to not only gain the insight about the topic, it also allows the respondents to describe the situation in details. However, there are few disadvantages that also affected the responses received such as biasness of the interviewee and domination faced by few respondents (Sekaran and Bougie 2016). Four companies and three consumer stores were chosen for conducting the interview. There was a total of five questions that was asked to the interviewee and an analysis was done based on the responses given by the. 
    Analysis of the collected data was done in a descriptive manner. This is the best way to analyze the result that is found from the collected data and responses (Brinkmann 2014). Descriptive analysis offers the researcher to analyze the data in great details by writing each and every minute details of the responses given. Answers given to both the open ended and closed ended questions were analyzed properly with descriptive analysis. Moreover, this type of analysis can be easily understood by anyone as it is not written in a technical language. 


Table: Interview Responses
What is the type of system used by businessmen to carry out regular payments?
Response: The most preferred mode of payment used is smartcard to make transfers and receive payments from foreign clients on a daily basis. 
What is the future view of the customers regarding digital payments?
Response: The customer has started trusting the online payment system with better security and technology progress day by day.
Number of orders on goods received online?
Response: the orders received from the customers through online mode on a daily basis is around 15 to 20. 


From the above responses and the details collected from the secondary data on the acceptance level of digital payment by the citizens of Hong Kong and the trust they hold for it, it can be clearly seen that there is a drastic difference between the secondary data and primary data. It has been successfully argued that the citizens of Hong Kong were very uncertain about the usage of digital mode of payments because of the risk factor involved in it. There were also evidences that argued with the statements saying that Hong Kong is one of the technologically developed place in the world and the people of the city are also well acquainted with it. Thus the secondary data offered a mixture of arguments which failed to support a single perspective and to get to a conclusion. This needed the support of primary data to judge the actual perspectives of the citizens of the city for digital payments by asking those questions. From the data that was collected from the interview by interviewing the businessmen and consumer stores, it is clear that there is a drastic change in the mind set of the people from the past. People are slowly changing their behavior towards digital payment system by paying through various digital payment instruments for all the things they are buying. 
    From the result of the interview it is seen that the number of people that preferred to buy things using physical money was less compared to ones that didn’t. On the other hand the percentage of people that preferred paying money using digital instruments are increasing. This shows that citizens of Hong Kong has started supporting and trusting the digital payment system compared to the past. Moreover, the businessmen also started adopting online mode of payment like smartcards to receive and offer payment in their business transactions. This shows that people are finding the digital payment system easier and faster. In the open ended questions as well the answers that the researcher received from the respondent showed a tilt towards digital payment system. This is also seen from eth data that the consumer store provided the researcher that in a day they receive a proportion of 15 to 20 order online. This is much more than the past orders they received when they started the system. Thus, the result that is visible from the interview supported the past literature because it was said that the usage rate of digital payment will increase in future. 


From the above analysis it can be deduced that the research has been very crucial in finding the perspective and trust of Hong Kong citizens for the usage of digital payment in their day to day life. It is clearly visible from the report that the people of Hong Kong trusts the digital payment system presently and they have developed their usage for their day to day transactions. The research took place using both secondary and primary research. This helped the researcher to get a deep understanding of what the scenario was in the past and the scenario that is prevalent presently. Other than this the primary research took place in the form of an interview which further helped to get an accurate result. Survey was done though an interview method in which two types of respondents were chosen that could offer the most accurate understanding of the scenario. The respondents were asked both open ended and closed ended questions through a face to face interview process. The responses collected from the primary researched was them compared with the primary research data and an analysis was presented in a descriptive manner. Descriptive analysis helped in understanding the result in a better way even to a person that lacked the knowledge about digitalization and research papers. 

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