[Dave Birch] Brian Chambers from Octopus Knowledge gave an update on the scheme at the Mobile Payment Strategies conference in Munich today and I thought an overview would be useful for digital moneyers. The key points are 14m cards issued, 50K POS terminals, 7m cards active, 400+ merchants of whom 60 are transport operators, 10m transactions per day (daily value €6m), some transactions are more than HK$100 (approximately US$15), the maximum balance allowed is HK$1,000 but the average balance is HK$10, the MSC fee is 1%, 20% of cards are autoloaded and 50% are loaded at retail points of sale, float income is used to reduce operational costs, about two-thirds of the transactions come from the transport operators who are the shareholders and a quarter of the transactions are non-transport (parking is counted as transport). The back office handles 8,000 enquiries per month, most of them enquiries about services and perhaps only one or two complaints per day (usually about not getting discounts because the transport operator has pressed a wrong button somewhere). The scheme now has loyalty points, “Octopus Rewards”: the majority of cards are anonymous so the loyalty programme is to encourage people to register so that Octopus can deliver better CRM and targetted marketing for clients. About 1.1m people have registered so far.

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Brian made a really good point about the consequence of the reliability and simplicity: “Most people don’t even know what the value of a transaction is… they just wait for the beep”. Actually he said that they wait for the beep or the “other tone” that means they’re running out of money and need to top up or autoload. He also said that autoload (when cards that are enabled for auto-load reach zero then the terminals automatically add HK$250 and the system does an overnight batch run to the banks) makes people less price-sensitive (they spend twice as much on the cards as non-autoload cards), which I guess confirms the figures from other environments where cash has been replaced.

There is 120% mobile penetration in Hong Kong, so obviously the integration of Octopus and mobile is of interest. They’ve been looking at bar codes (too slow and battery dependent), SMS messaging (slow and cumbersome) and so on but he was clear that his opinion was that NFC was the best prospect (but there must be unpowered operation and, of course, there are no actual handsets available!).

My opinions are my own (I think) and are presented solely in my capacity as an interested member of the general public. [posted with ecto]

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