Table Of Contents
OVERVIEW
Catalyst
Summary
EXECUTIVE SUMMARY
Sizing and forecasting the payment card market in Hong Kong
Competitor and product developments in Hong Kong
Bank of China and Hang Seng Bank lead in terms of customer service satisfaction
Hong Kong credit card consumers
High credit card penetration but low revolve rates represent a challenge for issuers
The emergence of the online channel for researching and applying for new cards is changing the market
Hong Kong consumers are the biggest online spenders in Asia As the coverage and penetration of online activity grows across the world, so too does consumer appetite for conducting their business online. From basic current account servicing through to the purchase of goods and services, online is a key growth area for the payment industry. Datamonitor estimates that the value of global online commerce reached $727bn by the end of 2011. Within this, online payments stood at an estimated $6.3bn in the Hong Kong market, making it the 11th largest market globally. On a per capita basis, when it comes to online spending Hong Kong consumers are towards the high end of the scale compared to other countries, at $885 per adult per year. This represents the highest online spending per capita across Asia.
Prepaid cards: the popularity of Octopus cards overshadows prepaid developments in the countryOver 24 million Octopus cards are now in circulation, which is a very high figure when compared to Hong Kong's population of 7 million people. Use of the card has expanded beyond the transit sector; now more than 10,000 retail outlets from over 4,000 service providers accept Octopus, representing a total of 11 million transactions a day with a turnover value of over HK$110m ($14.2m).
Contactless payments represent a $4.9bn opportunity in Hong Kong alone
Mobile payments: strong consumer demand but a lack of industry developments
The concept of mobile as a payment tool is well received by Hong Kong consumers
Despite strong potential, there have been no significant developments in mobile payments
SIZING AND FORECASTING THE PAYMENT CARD MARKET IN HONG KONG
Overview
Key macroeconomic and consumer data
Macroeconomic trends and performance
Demographic and consumer trends
Sizing the payment card market in Hong Kong
Size and performance of the payment card market
Payment card penetration
Number of payment cards in issue, by type
Number of payment card transactions
Frequency of use
Frequency of use, by POS and ATM
Value of payment card transactions
Trends in payment card use compared to other countries
Trends in primacy level
Trends in card usage
Revolve rates per outstanding balance
Repayment behavior
Forecasting the payment card market in Hong Kong
Forecasting the pay now card market
Forecasting the revolving credit card market
Forecasting the charge card market
COMPETITOR AND PRODUCT DEVELOPMENTS IN HONG KONG
Overview
The competitive landscape
Key competitors
Card issuer market shares and performance
Credit card market shares
Credit card transaction volumes and values by brand
Balances outstanding by brand
Credit card branding and usage
Usage trends by brand
Frequency of use by brand
Credit card product features
Leading revolving credit products and price points
Leading loyalty programs
Consumer satisfaction by credit card brand
Pay now card market shares
Charge and deferred debit card market shares
Payment card market developments
Major card scheme developments
Revolving credit card scheme shares
Charge card scheme shares
Regulatory environment
Key institutions and players
Easy Pay System and Joint Electronic Teller Services are the two main interbank service providers
HONG KONG CREDIT CARD CONSUMERS
Overview
Datamonitor has defined Hong Kong credit card consumer profiles
High credit card penetration but low revolve rates represent a challenge for issuers
Credit cards have become the second most commonly owned financial product in Hong Kong
Credit cards are highly popular across all working age groups
Transactors dominate Hong Kong's credit card market
The emergence of the online channel for researching and applying for new cards is changing the market
Face-to-face channels still provide the main source of information for new credit card customers
Online has emerged as an important credit card application channel for consumers
Many consumers are likely to look for new cards, which represents both opportunities and threats
Multi-card users are most likely to switch
Consumers indicate that there are barriers to obtaining a new credit card
Reward programs, particularly cashback, can tempt consumers to switch credit cards
Strong demand for exclusive offers drives a high card product holding per person
ONLINE, CONTACTLESS, PREPAID, AND MOBILE PAYMENTS
Overview
Online payments were an estimated $6.3bn market in 2011
Hong Kong consumers are the biggest online spenders in Asia
Credit cards account for the majority of online transactions in Hong Kong, in line with global trends
Prepaid cards: the popularity of Octopus cards overshadows prepaid developments in the country
Prepaid Octopus cards replace cash for both transit and non-transit low value payments
The popularity of Octopus cards makes it difficult for other prepaid providers to compete
Outside the transit sector, consumers use their prepaid cards for regular spending and online shopping
Contactless payments represent a $4.9bn opportunity in Hong Kong alone
The high usage of Octopus cards is driving further demand for contactless cards
Hong Kong is the sixth largest market in terms of potential opportunity per person for contactless payments in Asia Pacific
Convenience stores offer the biggest opportunity for contactless payments
Different industry standards between Octopus cards and global schemes are a major barrier to expansion
Mobile payments: strong consumer demands but lack of industry developments
The concept of mobile payment tools has been well received among Hong Kong consumers
Despite a strong potential, there have been no significant developments in mobile payments
APPENDIX
Supplementary data
Definitions
(Untitled sub-section)
Methodology
Cards and payments database
FSCI is new to Datamonitor's offering, providing new and valuable insight
Forecasting methodology
Further reading
Ask the analyst
Disclaimer
List Of Tables
Table: Hong Kong: macroeconomic indicators
Table: Hong Kong: demographics and consumer trends
Table: Datamonitor’s forecast for the pay now card market in Hong Kong, 2011–15f
Table: Datamonitor’s forecast for the credit card market in Hong Kong, 2011–15f
Table: Datamonitor’s forecast for the charge and deferred debit card market in Hong Kong, 2011–15f
Table: Fees and APRs applicable to selected revolving credit cards in Hong Kong
Table: Customer service satisfaction by card issuer
Table: Credit card product satisfaction by card issuer
Table: Responses to "Before you took out your last credit card did you take any of the following actions?"
Table: Responses to "How did you apply for your card/s?"
Table: Consumer likelihood of looking for a new credit card in the next six months, by segment
Table: Responses to "What did you get this card/s for, or what do you use it for most often?"
Table: Contactless opportunity market size ($bn)in Hong Kong, by transaction value band
List Of Figures
Figure: One in five credit card consumers obtained their product information from multiple channels
Figure: Two out of three Hong Kong consumers are interested in using their mobiles as a payment tool
Figure: In 2011 Hong Kong had the sixth largest economy in Asia Pacific
Figure: Hong Kong's economy has recovered since experiencing negative growth in 2009
Figure: HFCE and transaction values at the POS generally move in the same direction
Figure: Hong Kong had the sixth highest unemployment total in 2011
Figure: Hong Kong has the fourth highest card penetration rate in Asia Pacific
Figure: Pay later cards in Hong Kong have a penetration rate of 2.3 compared to 0.7 for pay now cards
Figure: Pay now card penetration in Hong Kong grew by 1.0% between 2007 and 2011
Figure: Pay later card penetration in Hong Kong grew by 2.4% between 2007 and 2011
Figure: The total number of payment cards in issue in Hong Kong increased from 19.3 million to 21.4 million during 2007–11
Figure: Credit cards were used in 69% of all payment card transactions in 2011
Figure: In Hong Kong more than 91% of all payment card transactions take place at POS terminals
Figure: Approximately one quarter of payment card transactions in Hong Kong involve the purchase of food and drink
Figure: Pay now cards are used almost 29 times per year, on average, in Hong Kong
Figure: Cards are used at POS terminals 10 times as frequently as at ATMs in Hong Kong
Figure: The value of credit card transactions was HK$404bn in 2011
Figure: POS transactions made up 84.6% of the total value of payment card transactions in Hong Kong in 2011
Figure: Payments for flights and hotels account for approximately one fifth of payment card transaction values in Hong Kong
Figure: The average transaction value using pay now cards was HK$1,947 in 2011
Figure: The average transaction value at ATMs fell to HK$2,326 in Hong Kong in 2011
Figure: With 76 transactions per card per year, Australia has the highest frequency of use for pay now cards at the POS
Figure: Turnover per pay now card totaled $7,191 in 2011 in Hong Kong
Figure: Hong Kong’s average transaction value for pay later cards at POS terminals was $135
Figure: The average turnover per pay later card was $3,340 in Hong Kong in 2011
Figure: Flights and hotels account for 19.5% of all pay later spending in Hong Kong
Figure: 40.4% of credit cards in Hong Kong are considered to be primary cards by consumers
Figure: 29% of cards are used all the time in Hong Kong
Figure: Hong Kong’s 8.7% revolve rate is the second lowest among these countries
Figure: 84.5% of consumers in Hong Kong pay off their balance in full each month
Figure: The number of pay now cards in issue is expected to grow by 2.8% in the next four years
Figure: The value of the credit card market is expected to grow at a CAGR of 11.2% during 2011–15f
Figure: Almost 300,000 charge cards will be issued in Hong Kong between 2011–15f
Figure: HSBC accounted for more than 25% of the credit cards in issue in Hong Kong in 2010
Figure: HSBC accounted for almost 63 million credit card transactions in Hong Kong in 2010
Figure: Standard Chartered has the highest average balance outstanding per credit card
Figure: 82.8% of Hang Seng Bank’s cards are standard-branded
Figure: A total of 56.1% of Hang Seng Bank's cards are used as consumers' primary credit cards
Figure: At HSBC, 45.0% of consumers use their card all of the time
Figure: Cashback is a standard card feature among most issuers in Hong Kong
Figure: Bank of China and Hang Seng Bank lead in terms of customer service satisfaction in Hong Kong
Figure: Bank of China and Citibank command the highest credit card product satisfaction in Hong Kong
Figure: HSBC customers are most likely to recommend their credit card to others
Figure: More than one fifth of pay now cards in Hong Kong have been issued by HSBC
Figure: In 2010, more than 41 million pay now transactions were carried out using cards issued by HSBC
Figure: HSBC captures around 21.7% of the charge and deferred debit card market in Hong Kong
Figure: Bank of East Asia’s charge card transactions were worth HK$2.3bn in 2010
Figure: Visa was responsible for 59.5% of all credit cards in issue in 2010
Figure: Visa accounted for 67.4% of the total credit card transaction value in 2010
Figure: American Express has almost 500,000 charge cards in issue
Figure: American Express accounts for the highest value of charge card transactions
Figure: Credit card have become the second most commonly owned financial product in Hong Kong
Figure: Credit cards are popular across all working age groups
Figure: Transactors dominate Hong Kong's credit card market
Figure: Face-to-face channels still provide the main source of information for new credit card customers
Figure: One in five credit card consumers obtained their product information from multiple channels
Figure: Most credit card consumers applied for their credit card in-branch
Figure: Online has emerged as an important credit card application channel for consumers
Figure: Multi-card users show the highest likelihood to switch to a new credit card
Figure: Cashback is the most desired credit card feature among consumers looking to switch
Figure: The majority of credit card customers hold more than one card
Figure: The value of online payments per adult in Hong Kong is the fifth highest globally
Figure: Flight and hotel bookings account for the largest share of online transaction values
Figure: Credit cards are the most popular method of transaction in Hong Kong
Figure: Relative to other countries, the use of credit cards for online payments is considerably low
Figure: The most common reason for consumers choosing not to shop online is fear of fraud
Figure: Octopus cards are the most popular prepaid cards in Hong Kong
Figure: Citibank and DBS launched Octopus-linked credit and ATM cards
Figure: Consumers use their prepaid cards for regular spending and online shopping
Figure: Hong Kong consumers show a strong interest in contactless payments
Figure: Contactless payments represent a $4.9bn opportunity in Hong Kong
Figure: Convenience stores offer the biggest opportunity for contactless payments in Hong Kong
Figure: Hong Kong consumers are familiar with using their mobiles to access digital content
Figure: Two out of three Hong Kong consumers are interested in using their mobiles as a payment tool