Why Tech-Hub Hong Kong Prefers Cash
Hong Kong is quick to embrace new technologies, and its Octopus card was an early leader in contactless payments, but when it comes to daily transactions, cash remains king. A finance expert recently explored why this trend endures.
Writing for the South China Morning Post, Neil Newman—a commentator on commercial investment trends and long-term resident of Hong Kong—reports that cash in circulation has continued to rise since the introduction of Octopus cards back in 1997, and physical money remains widely used—or even preferred—alongside other payment options.
Small payments are predominantly made in notes and coins. Taxi fares and markets are largely cash-only, and the region’s famed dai pai dong open-air food stalls and tea shops often refuse cards. Even larger restaurants may require customers to pay in cash, says Newman.
China is presently testing a digital currency in at least eight major cities, including Beijing, and Newman notes that Hong Kong is eager to participate. Does this mean the region will ultimately see a shift towards cashless payments? Newman thinks it unlikely. E-payments are well established and have not significantly eroded the popularity of cash.
One of the biggest hang-ups with… digital currency will be privacy concerns. Not only can the currency’s issuer and controller track usage, they can potentially also ‘turn off’ the money… To some extent this may explain why Hong Kong has been reluctant to go fully cashless.
Privacy remains a hot topic in the field of payments. Back in 2019, news and technology magazine Bitcoinist reported on Hong Kong residents protesting China’s Extradition Bill using cash to avoid being tracked by the government.
Newman also looks to other markets—such as Japan and the UK—where demand for high value notes continues to rise alongside penetration of electronic payments. He cites the key reasons for this as the unique anonymity offered by cash, the lack of incentive to have money in the bank while interest rates are low and fees may be charged to process it, and the general convenience of large banknotes as a personal store of value.
Hong Kong prides itself on being up with the latest technology and being a tech hub, but cash remains king, and a digital yuan might become a digital yawn.”