Hong Kong people have long used their Octopus cards for contactless payment in convenience stores and supermarkets. Mastercard’s Head of Prepaid Products, Benjamin Leung, shares how their cards will help bolster the use of electronic payments in the city and beyond, writes Nicky Burridge
Photography by Calvin Sit
Imagine running out of milk and being able to order and pay for a replacement carton, right through your fridge.
It may sound like the future, but Mastercard has already run a pilot with Samsung in the United States that enables consumers to do just that. “The idea is that the fridge would have a panel that is linked to the Internet electronically,” Benjamin Leung, Head of Prepaid Products, Hong Kong and Macau, at Mastercard, and a member of the Hong Kong Institute of CPAs, explains.
“We would work with partners like grocery suppliers, so that all you need to do is look into your fridge and order what you need. The supplier would then deliver it right to your front door.”
Fridges are not the only things Mastercard wants to harness as payment devices. It is also looking at enabling car keys, smartwatches and even rings to be used for transactions. “Our intention is to make every device that can be connected to the Internet a commerce device,” he says.
Leung is somewhat of a pioneer, who spends his days thinking about changing the way consumers pay for things. “I view myself and the team as builders and architects. What we try to do is enhance and create the payment landscape of the future,” he explains.
Leung’s role involves planning and building strategies for how Mastercard can grow its business in Hong Kong and Macau, with a particular focus on prepaid cards. The post has significant challenges, not least of which is finding the right partners and predicting which payment trends will be picked up by consumers.
“Being at the forefront of the payments industry, we tend to have many different partners that have different solutions, but in reality, we don’t know which one is going to become popular,” he says. “The situation is changing very quickly. The changes in the last five years have been bigger than the changes in the last 50 years.”
Hong Kong has a reputation for lagging behind other places in terms of its take up of non-cash payments. A 2017 study by Mastercard found that only 44 percent of local consumers had made a payment using a smartphone during the past three months, compared with 71 percent in Mainland China.
But Leung thinks while Hong Kong’s progress has not been as rapid as the Mainland’s, it is still moving towards being a cashless society. “Electronic payments have many advantages, which include financial inclusion, security and convenience for consumers, efficiency of the payment itself and the ability to reduce fraud and corruption,” he says. “Each product and country will have a unique path towards the development of a cashless society, but to me, as long as we are moving towards that goal, then it’s a very good path to be on.”
Mastercard has enabled its cardholders to use their smartphones to complete transactionswith ApplePay and SamsungPay in Hong Kong, and although he cannot disclose figures, Leung is pleased with the take-up rate.
He thinks the growth of mobile payments will be a significant trend in Hong Kong. “I have seen research that has shown that in the e-commerce space, the percentage mix between those making purchases through their computers and smartphones is getting close to 50/50, and very shortly mobile payments, or m-commerce, as they like to call it, will overtake computers,” he says.
“Each product and country will have a unique path towards the development of a cashless society, but to me, as long as we are moving towards that goal, then it’s a very good path to be on.”
The prepaid card landscape is a highly competitive one in Hong Kong, not least because 99 percent of the population has an Octopus card, according to the Octopus website. Leung sees the situation as an opportunity rather than a challenge. “I think [the prevalence of Octopus] is a great development for the payment business – the reason being that everyone in Hong Kong is now very familiar with the concept of prepaid cards.
He adds that the situation also enables Mastercard to highlight the differences of its prepaid products, such as the fact they can be used anywhere in the world, both physically and virtually. “It is more important to focus on what innovative features we can come up with and also to expand the payment acceptance side, where merchants are willing to accept our products,” he says.
He feels the same way about Mainland payment solutions that are available in Hong Kong, such as Alipay and Tencent’s WeChat Pay. “Competition is a good thing in general, as it puts pressure on all parties to come up with more innovative and better products that consumers are likely to take up.”
He adds that competition between players in the payment market is only one piece of the jigsaw puzzle. “We have to remember that in Hong Kong, consumers still tend to pay with a lot of cash and cheques. We are looking to tackle this, and the opportunity is very big,” he says.
Leung also welcomes rules in Hong Kong launched in 2016 under which companies offering prepaid cards, known as stored value facilities, have to obtain a licence from the Hong Kong Monetary Authority. While the move did not impact payment technology brands like Mastercard, as it is not an issuer of the cards, Leung thinks it was a very positive development for the retail payment industry. “Prepaid cards are what we call a ‘pay before’ product, so the consumer will load money on to a facility and thereafter spend the money,” he explains. “The critical part of that business flow is that the provider must be secure and safe and have credibility.”
He points out that many stored value facility providers are non-financial institutions, and having the same regulator as banks in Hong Kong gives them trustworthiness and credibility. “It is confidence-building, as consumers are more likely to have confidence in them knowing that the regulator is behind them,” he says.
A solid grounding
Leung knew from a very young age that he wanted a career in the finance and commerce industry, and gaining an accounting accreditation was very important to him. He started out working in the audit department for Ernst & Young (now EY) in Australia, and after qualifying as a Chartered Accountant, he came to Hong Kong on secondment.
After a couple of years, he moved into financial control, taking up a post with Bankers Trust which was later acquired by Deutsche Bank, before joining Mastercard to work in financial planning. “The company gives us a lot of opportunities to move into different roles. So from the traditional financial planning and control role, I moved into business development. From there I went into what we call account management and subsequently into this role, which is market development,” he says.
Leung thinks his background in auditing has been good preparation for his current post. “I think auditing is a great place to start. You get to see very early what makes a company tick, and what makes company A successful versus what makes company B successful.”
“Without a grounding that CPA training provides you in understanding the accounting principles behind the numbers, trend spotting would be a lot tougher.”
He adds that his audit experience also helped him to understand the nuances of what made certain policies and processes work in some areas but not in others.
“I think starting in a true accounting capacity actually helps you enhance and build your financial discipline and your sensitivity, as well as your interpretation of numbers,” he says. “When you are responsible for profit and loss, everything is in the numbers. You have got to be able to make the numbers work, so you have got to be able to interpret certain data to formulate the strategies that will eventually grow your business.”
It is clear that Leung is someone who enjoys getting to the very bottom of things to understand how they work. One of the most memorable moments of his early career was working on the audit team of an Australian dog food manufacturer.
“It was fascinating seeing how they cook the food, how they package it and how they have different segmentations in terms of a basic product and a premium product,” he says.
Another experience that stands out for him was auditing a beer manufacturer and getting to grips with the whole process from fermenting the barley to bottling the beer. “That is the benefit of starting in audit. When you are a junior, you do all the dirty work, so you have to go around the plants and see how they make stuff – it is very interesting,” he says.
Passion for numbers
When he is not working, Leung likes to try to stay healthy by playing tennis and golf. But his real passion is personal investing, and he has obtained accreditation from the CFA Institute, the association for investment professionals, as a chartered financial analyst. “A key benefit of the CFA qualification is the ability it teaches its members to find trends in the numbers, whether it be company specific, industry related or market-wide. Without a grounding that CPA training provides you in understanding the accounting principles behind the numbers, trend spotting would be a lot tougher,” says Leung.
The CPA training, he adds, helps instil discipline and provides credibility that allows Institute members to present a company’s performance or financials in the most accurate way. “Without trust in the underlying numbers, the general public would not have the confidence to interpret performance and make investment decisions.”
“For me, it is not so much about making money – I am more intrigued by what makes a company worth more or less over time in the market’s eyes, and the ability to interpret trends and make investment decisions to take advantage of them,” he says. “I like the fact that there is only really one answer. The market will tell you through the price movements of the investments whether your thinking is right or wrong.”
He adds that in many ways he has to become a crystal ball and interpret what will happen in the future – not at all unlike his day job.
44 percent of Hong Kong consumers made a payment using a smartphone during the past three months, compared with 71 percent in Mainland China, finds a 2017 study by Mastercard.