The recent technical mishaps involving local electronic payments service provider TnG, which affected thousands of users, once again ignited public concern over the safety and reliability of the so-called “electronic purse”.
Many doubt whether online payment systems and electronic money widely used these days are subject to any regulation at all. They are, actually.
On Nov. 4, the Legislative Council passed the Payment Systems and Stored Value Facilities Ordinance, which came into effect on Nov. 13, under which all online payments service and “electronic purse” providers, including Octopus Card, PayPal, and AliPay, must apply for licenses in order to operate legally in Hong Kong.
A one-year grace period will be granted to existing and prospective service providers to sort out the legal details and apply for their licenses. From Nov. 13, 2016 onwards, any service provider operating without a license will face criminal charges.
Some in the media described the one-year grace period as a “vacuum period”, during which consumers can only use these services at their own risk.
This is not entirely accurate because even though the law won’t be officially enforced until November 2016, both the Hong Kong Monetary Authority and the police have vowed to keep a close eye on the market and identify business practices that may involve foul play or pose risks to consumers.
One merit about placing “e-money” under the ambit of law is that the authorities can guarantee the financial soundness, stability of operation and quality of service of online payments system and electronic purse providers, thereby safeguarding the rights and interests of consumers.
What is equally important is that the new law can strike a balance between risk management and technological innovation in the public interest.
However, like any other technological innovations, e-money can’t be 100 percent risk-proof. As the technology continues to evolve, it might come across new problems and challenges, and it takes time to find solution.
Therefore, while I hope the new law can provide more protection for consumers, the public must also manage their expectations and allow more time for service providers to improve their system.
After all, consumers’ patience is often as equally important as scientific creativity when it comes to the successful application of new technologies.
This article appeared in the Hong Kong Economic Journal on Nov. 16.
Translation by Alan Lee