Authorities in Hong Kong have announced the launch of the Faster Payment System, which is a fintech framework aimed at upgrading the system of retail payments in the country.
Initially announced by the Hong Kong Monetary Authority (HKMA) two weeks ago, it will allow for business transactions to happen in real time around the clock, without the need for cash and requiring only a mobile phone number or an email address.
Implications for Hong Kong’s Economy
This development seeks to redefine Hong Kong’s commercial landscape by transforming it into a cashless economy in which daily business transactions are substantially easier, which is expected to have a positive knock-on effect on the country’s GDP.
According to the HKMA, the FPS framework enables customers to make cross-bank/SVF payments easily, by entering the mobile phone number or email address of the recipient, with funds becoming available to the recipient almost instantly.
At the point of launch, 21 financial institutions including several retail banks and Stored-Value Facility operators have been integrated into the system, enabling them to provide service to customers immediately.
FPS Operational Framework
The FPS will accommodate the use of the Hong Kong Dollar (HKD) and China’s fiat currency Renminbi (RMB) for transactions in the mainland. HKMA will handle the Ledger of settlement for HKD payments while Bank of China (Hong Kong) Limited executes the same role for RMB payments. Hong Kong Interbank Clearing Limited will then function as the system’s underpinning operator.
A free mobile app called Hong Kong Common QR Code (HKQR) initiated by the HKMA will help communicate the common QR code standard for retail payments to all concerned parties. The app also helps convert multiple QR codes from several payment providers into a single combined QR code to streamline payments among all the financial institutions involved.
The Faster Payment System is an important initiative for the country of seven million people, whose superheated economy depends on its ability to attract talent, businesses and investors from around the world. The HKMA is hopeful that this initiative will enjoy large-scale adoption, as the country seeks to remain at the cutting edge of global financial innovation.