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16 Aug 2022  (627 Views) 
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Monetary Auth of Singapore


Octopus card is well used in Hong Kong
Several people told me that the Octopus card is well used in Hong Kong. My friend, who lived in Hong Kong for one year, told me that he used the Octopus card for payment for transport, restaurant and groceries. He hardly pay by cash.

By contrast, the Ez Link card and Nets Flash card is hardly used in Singapore, other than for transport. Most of the small payments are still made by cash. 

What is the difference between Hong Kong and Singapore that led to the different rate of adoption of card payments?

I found the following facts from my research:

a) Cash withdrawals from ATMs are free in both territories
b) Cash deposits in Hong Kong incur a charge of 0.25% while the charge in Singapore is much lower. 

Merchants in Hong Kong have to pay a transaction fee of 1% for  payments through Octopus, while merchants in Singapore pay a lower fee for payments to Nets Flash and Ez Link. 

Based on the relative fee structure, I would expect that merchants in Singapore to be more positive towards the adoption of cash card payment, than it has happened. 

I suspect that the merchants in Hong Kong are more aware of the cost of handling cash, than merchants in Singapore. 

I estimate that a business outlet probably have to spend 10% of the staff cost on handling cash payments, i.e. counting cash, giving change, daily reconciliation of cash collection and banking in of cash. 

If the staff cost of a business is $10,000 a month (say four staff), the 10% for handling cash payment amounts to $1,000 a month. This would probably be much higher than the transaction fee payable for cash card payments.

It is likely that the business outlets in Hong Kong are more aware of the hidden cost of handling cash payments, compared to those in Singapore. 

Many businesses in Singapore advertise for retail workers. There is a shortage of these workers. If these businesses adopt cash card payments, they will probably need less retail staff. 

Tan Kin Lian


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