Hong Kong’s Cards and Payments Industry: Emerging Opportunities, Trends, Size, Drivers, Strategies, Products and Competitive Landscape

In terms of the number of cards in circulation, the Hong Kong card payments channel registered positive growth during the review period (2009–2013), recording a compound annual growth rate (CAGR) of 5.23% to reach 50.8 million cards in 2013. In terms of transaction value, the card payments channel valued HKD943.9 billion (US$121.7 billion) in 2013, after registering a CAGR of 10.94%. Improved banking infrastructure and the increasing acceptance of card-based payments at point-of-sale (POS) terminals were key growth drivers for the card payments channel.

In terms of transaction value, credit cards accounted for the highest share during review period with 51.7% in 2013, and are expected to maintain this over the forecast period (2014−2018). The category is expected to post a forecast-period CAGR of 3.31% from HKD512.1 billion (US$66.0 billion) in 2014 to HKD583.3 billion (US$75.2 billion) in 2018. The second-highest share in terms of transaction value was held by debit cards with 40.9%, followed by prepaid cards (5.7%) and charge cards (1.7%).

The debit card category is anticipated to post a forecast-period CAGR of 1.31%, while the prepaid card category is expected to register a CAGR of 2.56% and the credit card category is projected to record a CAGR of 2.45% over the forecast period. Due to the convenience of electronic payments, the emergence of contactless payment systems and an increase in security features, Hong Kong’s population have been encouraged to perform more card-based transactions. Despite the financial crisis, Hong Kong recorded a growth in credit card expenditure, supported by the increased acceptance of these cards at POS terminals and associated benefits associated such as reward points, discounts and cashback. All the major global card scheme providers − Visa, MasterCard, American Express, Diners Club and JCB International (JCB) − have a presence in the country’s credit card category.

The prepaid cards category grew at a strong pace during the review period, a trend that is anticipated to continue over the forecast period. The rising demand for Octopus cards supported the category’s growth. Initially developed to be used for public transit systems, the cards are now used for to make payments at car parks, leisure facilities and retail outlets. These cards are compatible with contactless payments, and facilitate faster payments.

Total card fraud in Hong Kong recorded a review-period CAGR of -4.70%, declining from HKD10.5 million (US$1.4 million) in 2009 to HKD8.6 million (US$1.1 million) in 2013. As part of offering enhanced security for automatic teller machine (ATM) transactions, in June 2011, the Hong Kong Monetary Authority (HKMA) announced the implementation of chip-based technology for all ATM services. This process is expected to be completed by the end of 2015.

Scope

• GlobalData's 'Hong Kong's Cards and Payments Industry: Emerging Opportunities, Trends, Size, Drivers, Strategies, Products and Competitive Landscape' report provides a comprehensive analysis of Hong Kong's cards and payments industry.

• It provides current values for Hong Kong's cards and payments industry for 2013, and forecast figures for 2018.

• It details the different economic, infrastructural and business drivers affecting Hong Kong's cards and payments industry.

• It outlines the current regulatory framework in the industry.

• It details the marketing strategies used by various banks and other institutions.

• It profiles the major banks in Hong Kong's cards and payments industry.

Key Highlights

• In terms of number of cards in circulation, the Hong Kong card payments channel registered positive growth during the review period (2009–2013), recording a compound annual growth rate (CAGR) of 5.23% to reach 50.8 million cards in 2013. In terms of transaction value, the card payments channel valued HKD943.9 billion (US$121.7 billion) in 2013, after registering a CAGR of 10.94%. Improved banking infrastructure and the increasing acceptance of card-based payments at point-of-sale (POS) terminals were key growth drivers for the card payments channel.

• In terms of transaction value, credit cards accounted for the highest share during review period with 51.7% in 2013, and are expected to maintain this over the forecast period (2014−2018). The category is expected to post a forecast-period CAGR of 3.31% from HKD512.1 billion (US$66.0 billion) in 2014 to HKD583.3 billion (US$75.2 billion) in 2018. The second-highest share in terms of transaction value was held by debit cards with 40.9%, followed by prepaid cards (5.7%) and charge cards (1.7%).

• The debit card category is anticipated to post a forecast-period CAGR of 1.31%, while the prepaid card category is expected to register a CAGR of 2.56% and the credit card category is projected to record a CAGR of 2.45% over the forecast period. Due to the convenience of electronic payments, the emergence of contactless payment systems and an increase in security features, Hong Kong’s population have been encouraged to perform more card-based transactions. Despite the financial crisis, Hong Kong recorded a growth in credit card expenditure, supported by the increased acceptance of these cards at POS terminals and associated benefits associated such as reward points, discounts and cashback. All the major global card scheme providers − Visa, MasterCard, American Express, Diners Club and JCB International (JCB) − have a presence in the country’s credit card category.

• The prepaid cards category grew at a strong pace during the review period, a trend that is anticipated to continue over the forecast period. The rising demand for Octopus cards supported the category’s growth. Initially developed to be used for public transit systems, the cards are now used for to make payments at car parks, leisure facilities and retail outlets. These cards are compatible with contactless payments, and facilitate faster payments.

• Total card fraud in Hong Kong recorded a review-period CAGR of -4.70%, declining from HKD10.5 million (US$1.4 million) in 2009 to HKD8.6 million (US$1.1 million) in 2013. As part of offering enhanced security for automatic teller machine (ATM) transactions, in June 2011, the Hong Kong Monetary Authority (HKMA) announced the implementation of chip-based technology for all ATM services. This process is expected to be completed by the end of 2015.

Reasons to buy

• Make strategic business decisions using top-level historic and forecast market data related to Hong Kong's cards and payments industry and each market within it.

• Understand the key market trends and growth opportunities within Hong Kong's cards and payments industry.

• Assess the competitive dynamics in Hong Kong's cards and payments industry.

• Gain insights in to the marketing strategies used for selling various card types in Hong Kong.

• Gain insights into key regulations governing Hong Kong's cards and payments industry.

Companies mentioned

HSBC

Standard Chartered Bank (Hong Kong)

Hang Seng Bank

Citibank Hong Kong

Bank of China (BOC) Hong Kong

MasterCard

American Express

Visa

Diners Club

JCB

EPS

Table of Contents

1 Executive Summary

2 Analysis of Industry Environment, Key Trends and Drivers

2.1 Payment Infrastructure and Emerging Technologies

2.1.1 ATMs

2.1.2 POS terminals

2.1.3 Internet penetration

2.1.4 Contactless technology

2.1.5 EMV

2.1.6 M-payments

2.2 Business Drivers

2.2.1 Growth of e-commerce

2.2.2 Retail sales value

2.3 Economic Drivers

2.3.1 Nominal GDP per capita

2.3.2 Real GDP growth

2.3.3 Inflation

2.3.4 Government initiatives for economic growth

3 Cards and Payments Industry Share Analysis

3.1 Industry Overview

3.1.1 Cash transactions

3.1.2 Check payments

3.1.3 Direct debits

3.1.4 Credit transfers

3.1.5 Card transactions

4 Regulatory Framework and Card Fraud Statistics

4.1 Regulatory Framework

4.1.1 Regulatory framework

4.1.2 New measures to protect the credit card holders from unreasonable charges

4.1.3 Anti-money laundering framework

4.1.4 Foreign direct investment (FDI) regulations

4.2 Card Fraud Statistics

4.2.1 Card-not-present fraud

4.2.2 Counterfeit cards

4.2.3 Lost or stolen card

4.2.4 Card ID theft

5 Emerging Consumer Attitudes and Trends

5.1 Market Segmentation and Targeting

5.1.1 Retail segment

5.1.2 Corporate segment

5.2 Travel and Tourism Spending

5.2.1 Outbound tourist volume

5.2.2 Outbound tourist spending

6 Analysis of Card Payments and Growth Prospects

6.1 Channel Share Analysis by Card Category

6.2 Size and Forecast of the Card Payments Channel

6.2.1 Analysis by volume of cards in circulation

6.2.2 Analysis by transaction value

7 Analysis of Credit Card Payments and Growth Prospects

7.1 Overall Category Size and Forecast

7.1.1 Analysis by volume of cards in circulation

7.1.2 Analysis by transaction value

7.1.3 Analysis by transaction volume

7.2 Transaction Share Analysis by Channel

7.2.1 Analysis by transaction value

7.2.2 Analysis by transaction volume

7.3 Personal Credit Cards Size and Forecast

7.3.1 Analysis by volume of cards in circulation

7.3.2 Analysis by transaction value

7.3.3 Analysis by transaction volume

7.4 Commercial Credit Cards Size and Forecast

7.4.1 Analysis by number of cards in circulation

7.4.2 Analysis by transaction value

7.4.3 Analysis by transaction volume

7.5 Competitive Landscape

7.5.1 Scheme share analysis

7.5.2 Issuer share analysis

8 Analysis of Debit Card Payments and Growth Prospects

8.1 Overall Category Size and Forecast

8.1.1 Analysis by volume of cards in circulation

8.1.2 Analysis by transaction value

8.1.3 Analysis by transaction volume

8.2 Transaction Share Analysis by Channel

8.2.1 Analysis by transaction value

8.2.2 Analysis by transaction volume

8.3 Competitive Landscape

8.3.1 Scheme share analysis

8.3.2 Issuer share analysis

9 Analysis of Charge Card Payments and Growth Prospects

9.1 Overall Category Size and Forecast

9.1.1 Analysis by volume of cards in circulation

9.1.2 Analysis by transaction value

9.1.3 Analysis by transaction volume

9.2 Transaction Share Analysis by Channel

9.2.1 Analysis by transaction value

9.2.2 Analysis by transaction volume

9.3 Personal Charge Cards Size and Forecast

9.3.1 Analysis by number of cards in circulation

9.3.2 Analysis by transaction value

9.3.3 Analysis by transaction volume

9.4 Commercial Charge Cards Size and Forecast

9.4.1 Analysis by number of cards in circulation

9.4.2 Analysis by transaction value

9.4.3 Analysis by transaction volume

9.5 Competitive Landscape

9.5.1 Scheme share analysis

10 Analysis of Prepaid Card Payments and Growth Prospects

10.1 Overall Category Size and Forecast

10.1.1 Analysis by volume of cards in circulation

10.1.2 Analysis by transaction value

10.2 Open-Loop Prepaid Cards Segment Size and Forecast

10.2.1 Analysis by number of cards in circulation

10.2.2 Analysis by transaction value

10.3 Closed-Loop Prepaid Cards Segment Size and Forecast

10.3.1 Analysis by volume of cards in circulation

10.3.2 Analysis by transaction value

11 Merchant Acquiring

12 Company Profiles of Card Issuers

12.1 HSBC

12.1.1 Key financials

12.1.2 Card portfolio

12.1.3 Strategies

12.2 Standard Chartered Bank (Hong Kong) Ltd

12.2.1 Key financials

12.2.2 Card portfolio

12.2.3 Strategies

12.3 Hang Seng Bank

12.3.1 Key financials

12.3.2 Card portfolio

12.3.3 Strategies

12.4 Citibank Hong Kong

12.4.1 Key financials

12.4.2 Card portfolio

12.4.3 Strategies

12.5 Bank of China (BOC) Hong Kong

12.5.1 Key financials

12.5.2 Card portfolio

12.5.3 Strategies

13 Appendix

13.1 Methodology

13.2 Contact GlobalData

13.3 About GlobalData

13.4 GlobalData’s Services

13.5 Definitions

13.6 Disclaimer

List of Tables

Table 1: Hong Kong – Payment Channels (HKD Billion), 2009–2013

Table 2: Hong Kong – Number of Banks, April 2014

Table 3: Hong Kong − Market Entry Strategies of Foreign Banks

Table 4: Hong Kong – Card Fraud (HKD Thousand), 2009–2013

Table 5: Hong Kong − Cards for Premium Customers, 2014

Table 6: Hong Kong – Dual-Currency Cards for Frequent Travelers Between China and Hong Kong, 2014

Table 7: Hong Kong − Cards for Frequent Flyer, 2014

Table 8: Hong Kong − Cards for Business Managers and Entrepreneurs, 2014

Table 9: Hong Kong Card Payments Channel by Card Category (Million), 2009–2018

Table 10: Hong Kong Card Payments Channel Size by Volume of Cards (Million), 2009–2018

Table 11: Hong Kong Card Payments Channel Size by Transaction Value (HKD Billion), 2009–2018

Table 12: Hong Kong Card Payments Channel Size by Transaction Value (US$ Billion), 2009–2018

Table 13: Hong Kong Credit Cards Category Size by Volume of Cards (Million), 2009–2018

Table 14: Hong Kong Credit Cards Category Size by Transaction Value (HKD Billion), 2009–2018

Table 15: Hong Kong Credit Cards Category Size by Transaction Value (US$ Billion), 2009–2018

Table 16: Hong Kong Credit Cards Category Size by Transaction Volume (Million), 2009–2018

Table 17: Hong Kong Personal Credit Cards Segment Size by Volume of Cards (Million), 2009–2018

Table 18: Hong Kong Personal Credit Cards Segment Size by Transaction Value (HKD Billion), 2009–2018

Table 19: Hong Kong Personal Credit Cards Segment Size by Transaction Value (US$ Billion), 2009–2018

Table 20: Hong Kong Personal Credit Cards Segment Size by Transaction Volume (Million), 2009–2018

Table 21: Hong Kong Commercial Credit Cards Segment Size by Volume of Cards (Thousand), 2009–2018

Table 22: Hong Kong Commercial Credit Cards Segment Size by Transaction Value (HKD Billion), 2009–2018

Table 23: Hong Kong Commercial Credit Cards Segment Size by Transaction Value (US$ Million), 2009–2018

Table 24: Hong Kong Commercial Credit Cards Segment Size by Transaction Volume (Million), 2009–2018

Table 25: Hong Kong Debit Cards Category Size by Volume of Cards (Thousand), 2009–2018

Table 26: Hong Kong Debit Cards Category Size by Transaction Value (HKD Billion), 2009–2018

Table 27: Hong Kong Debit Cards Category Size by Transaction Value (US$ Billion), 2009–2018

Table 28: Hong Kong Debit Cards Category Size by Transaction Volume (Million), 2009–2018

Table 29: Hong Kong Charge Cards Category Size by Volume of Cards (Thousand), 2009–2018

Table 30: Hong Kong Charge Cards Category Size by Transaction Value (HKD Billion), 2009–2018

Table 31: Hong Kong Charge Cards Category Size by Transaction Value (US$ Billion), 2009–2018

Table 32: Hong Kong Charge Cards Category Size by Transaction Volume (Million), 2009–2018

Table 33: Hong Kong Personal Charge Cards Segment Size by Volume of Cards (Thousand), 2009–2018

Table 34: Hong Kong Personal Charge Cards Segment Size by Transaction Value (HKD Billion), 2009–2018

Table 35: Hong Kong Personal Charge Cards Segment Size by Transaction Value (US$ Million), 2009–2018

Table 36: Hong Kong Personal Charge Cards Segment Size by Transaction Volume (Million), 2009–2018

Table 37: Hong Kong Commercial Charge Cards Segment Size by Volume of Cards (Thousand), 2009–2018

Table 38: Hong Kong Commercial Charge Cards Segment Size by Transaction Value (HKD Billion), 2009–2018

Table 39: Hong Kong Commercial Charge Cards Segment Size by Transaction Value (US$ Million), 2009–2018

Table 40: Hong Kong Commercial Charge Cards Segment Size by Transaction Volume (Million), 2009–2018

Table 41: Hong Kong Prepaid Cards Category Size by Volume of Cards (Million), 2009–2018

Table 42: Hong Kong Prepaid Cards Category Size by Transaction Value (HKD Billion), 2009–2018

Table 43: Hong Kong Prepaid Cards Category Size by Transaction Value (US$ Billion), 2009–2018

Table 44: Hong Kong Open-Loop Prepaid Cards Segment Size by Volume of Cards (Million), 2009–2018

Table 45: Hong Kong Open-Loop Prepaid Cards Segment Size by Transaction Value (HKD Billion), 2009–2018

Table 46: Hong Kong Open-Loop Prepaid Cards Segment Size by Transaction Value (US$ Billion), 2009–2018

Table 47: Hong Kong Closed-Loop Prepaid Cards Segment Size by Volume of Cards (Thousand), 2009–2018

Table 48: Hong Kong Closed-Loop Prepaid Cards Segment Size by Transaction Value (HKD Billion), 2009–2018

Table 49: Hong Kong Closed-Loop Prepaid Cards Segment Size by Transaction Value (US$ Million), 2009–2018

Table 50: HSBC – Key Financial Indicators (HKD Billion), December 2012 and 2013

Table 51: HSBC – Card Product Offerings and Key Features

Table 52: Standard Chartered Bank (Hong Kong) Ltd – Key Financial Indicators (HKD Billion), December 2012 and 2013

Table 53: Standard Chartered Bank (Hong Kong) Ltd – Card Product Offerings and Key Features

Table 54: Hang Seng Bank – Key Financial Indicators (HKD Billion), December 2012 and 2013

Table 55: Hang Seng Bank – Card Product Offerings and Key Features

Table 56: Citigroup – Key Financial Indicators (US$ Million), December 2012 and 2013

Table 57: Citibank Hong Kong – Card Product Offerings and Key Features

Table 58: BOC Hong Kong – Key Financial Indicators (HKD Billion), December 2012 and 2013

Table 59: BOC Hong Kong – Card Product Offerings and Key Features

Table 60: Key Definitions

List of Figures

Figure 1: Benchmarking the Hong Kong Card Payments Channel Against Other Markets in Asia Pacific

Figure 2: Hong Kong – Growth of Various Card Categories (%), 2009–2018

Figure 3: Hong Kong – ATM Volume and Penetration (Thousand), 2009–2018

Figure 4: Hong Kong – POS Terminals Volume and Penetration (Thousand), 2009–2018

Figure 5: Hong Kong – Internet Penetration (Internet Users per 100 Inhabitants) (%), 2009–2018

Figure 6: Hong Kong − Number of Contactless Cards (Million), 2009–2013

Figure 7: Hong Kong – M-Payment Value (HKD Billion), 2009–2018

Figure 8: Hong Kong – E-Commerce Value (HKD Billion), 2009–2018

Figure 9: Retail Sales Value in Hong Kong (HKD Billion), 2009–2018

Figure 10: Hong Kong – Nominal GDP Per Capita (US$ Thousand), 2009–2018

Figure 11: Hong Kong – Real GDP Growth Rate (%), 2009–2018

Figure 12: Hong Kong – Inflation Rate (Consumer Price Inflation) (%), 2009–2018

Figure 13: Share of Hong Kong Payment Channels (%), 2009 and 2013

Figure 14: Hong Kong – Card Fraud (%), 2009 and 2013

Figure 15: Hong Kong – Card-Not-Present Fraud Value (HKD Million), 2009–2013

Figure 16: Hong Kong – Counterfeit Card Fraud Value (HKD Thousand), 2009–2013

Figure 17: Hong Kong – Lost or Stolen Card Fraud Value (HKD Thousand), 2009–2013

Figure 18: Hong Kong – Card ID Theft Value (HKD Thousand), 2009–2013

Figure 19: Hong Kong Cards and Payments Industry Segmentation by Card Type

Figure 20: Hong Kong Volume of Outbound Trips (Million), 2009–2018

Figure 21: Hong Kong Outbound Tourist Spending (HKD Billion), 2009–2018

Figure 22: Hong Kong Card Payments Channel by Card Category (%), 2009–2018

Figure 23: Hong Kong Card Payments Channel Size by Volume of Cards (Million), 2009–2018

Figure 24: Hong Kong Card Payments Channel Size by Transaction Value (HKD Billion), 2009–2018

Figure 25: Hong Kong Credit Cards Volume and Penetration, 2009–2018

Figure 26: Hong Kong Credit Cards Category Size by Volume of Cards (Million), 2009–2018

Figure 27: Hong Kong Credit Cards Category Size by Transaction Value (HKD Billion), 2009–2018

Figure 28: Hong Kong Credit Card Category Size by Transaction Volume (Million), 2009–2018

Figure 29: Hong Kong Credit Card Transaction Value by Channel (HKD Billion), 2009–2018

Figure 30: Hong Kong Credit Card Transaction Volume by Channel (Million), 2009–2018

Figure 31: Hong Kong Personal Credit Cards Segment Size by Volume of Cards (Million), 2009–2018

Figure 32: Hong Kong Personal Credit Cards Segment Size by Transaction Value (HKD Billion), 2009–2018

Figure 33: Hong Kong Personal Credit Cards Segment Size by Transaction Volume (Million), 2009–2018

Figure 34: Hong Kong Commercial Credit Cards Segment Size by Volume of Cards (Thousand), 2009–2018

Figure 35: Hong Kong Commercial Credit Cards Segment Size by Transaction Value (HKD Billion), 2009–2018

Figure 36: Hong Kong Commercial Credit Cards Segment Size by Transaction Volume (Million), 2009–2018

Figure 37: Hong Kong Credit Cards Category Share by Scheme (%), 2013

Figure 38: Hong Kong Credit Cards Category Share by Issuer (%), 2013

Figure 39: Hong Kong Debit Cards Category Volume and Penetration, 2009–2018

Figure 40: Hong Kong Debit Cards Category Size by Volume of Cards (Million), 2009–2018

Figure 41: Hong Kong Debit Cards Category Size by Transaction Value (HKD Billion), 2009–2018

Figure 42: Hong Kong Debit Cards Category Size by Transaction Volume (Million), 2009–2018

Figure 43: Hong Kong Debit Cards Category Transaction Value by Channel (HKD Billion), 2009–2018

Figure 44: Hong Kong Debit Cards Transaction Volume by Channel (Million), 2009–2018

Figure 45: Hong Kong Debit Cards Category Share by Scheme (%), 2013

Figure 46: Hong Kong Debit Cards Category Shares by Issuer (%), 2013

Figure 47: Hong Kong Charge Cards Category Volume and Penetration, 2009–2018

Figure 48: Hong Kong Charge Cards Category Size by Volume of Cards (Thousand), 2009–2018

Figure 49: Hong Kong Charge Cards Category Size by Transaction Value (HKD Billion), 2009–2018

Figure 50: Hong Kong Charge Cards Category Size by Transaction Volume (Million), 2009–2018

Figure 51: Hong Kong Charge Cards Transaction Value by Channel (HKD Billion), 2009–2018

Figure 52: Hong Kong Charge Cards Transaction Volume by Channel (Million), 2009–2018

Figure 53: Hong Kong Personal Charge Cards Segment Size by Volume of Cards (Thousand), 2009–2018

Figure 54: Hong Kong Personal Charge Cards Segment Size by Transaction Value (HKD Billion), 2009–2018

Figure 55: Hong Kong Personal Charge Cards Segment Size by Transaction Volume (Million), 2009–2018

Figure 56: Hong Kong Commercial Charge Cards Segment Size by Volume of Cards (Thousand), 2009–2018

Figure 57: Hong Kong Commercial Charge Cards Segment Size by Transaction Value (HKD Billion), 2009–2018

Figure 58: Hong Kong Commercial Charge Cards Segment Size by Transaction Volume (Million), 2009–2018

Figure 59: Hong Kong Charge Cards Category Share by Scheme (%), 2013

Figure 60: Hong Kong Prepaid Cards Category Volume and Penetration, 2009–2018

Figure 61: Hong Kong Prepaid Cards Category Size by Volume of Cards (Million), 2009–2018

Figure 62: Hong Kong Prepaid Cards Category Size by Transaction Value (HKD Billion), 2009–2018

Figure 63: Hong Kong Open-Loop Prepaid Cards Segment Size by Volume of Cards (Million), 2009–2018

Figure 64: Hong Kong Open-Loop Prepaid Cards Segment Size by Transaction Value (HKD Billion), 2009–2018

Figure 65: Hong Kong Closed-Loop Prepaid Cards Segment Size by Volume of Cards (Thousand), 2009–2018

Figure 66: Hong Kong Closed-Loop Prepaid Cards Segment Size by Transaction Value (HKD Billion), 2009–2018

Figure 67: Market Shares of Key Acquirers’ POS Transactions in Hong Kong (%), 2013

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