Research Proposal - Smart Cards in Hong Kong: Hong Kong’s Electronic Payment Impact on Society and the Financial Sector

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Smart Cards in Hong Kong: Hong Kong’s Electronic Payment Impact on Society and the Financial Sector

Abstract

The study focuses on the use of smart card in Hong Kong and how it impacts society and the financial sector. Some of the concerns that will be questioned in the study are the reasons why smart cards such as the Octopus card are widely used in Hong Kong, knowledge of users on the risk and advantages of smart cards, its financial benefits to the society and the financial sector, attitude of users toward security with smart card, and existing security measures against financial frauds. Of course, the study will also explore everything about smart cards in Hong Kong. The reason why this topic is chosen is because smart cards are still new in the society and still lacks closer investigation. There are only little knowledge about its risks and advantages, yet it spread in Hong Kong just like a wildfire. Investigation will be done through literature research and secondary surveys and interviews. The aim is to find information and expand them into digestible knowledge. It is hoped that this study will help increase knowledge regarding smart cards in Hong Kong, especially its impact on individuals and the financial service industry. Estimated, this study will be finished within a year.

Introduction

The study questions the use of smart card in Hong Kong and how it impacts society and the financial sector. The following are the sub-research questions in the study:

1.    What are the reasons why Hong Kong smart card users resort to e-purse transactions?

2.         Do Hong Kong smart card users knowledgeable about the risks and advantages the cards offer?

3.         What are the financial benefits to the society of using smart cards? What are its benefits to financial service providers?

4.         Do Hong Kong smart card users feel secure with e-purse transactions?

5.         What are the security measures that smart card companies in Hong Kong such as the “Octopus” do in order to protect the users from financial fraud?

The research questions and sub-questions stated above are interesting for the researcher because of more and more people in Hong Kong are now using smart cards or e-purse transactions. The popular smart card in the island known as the “Octopus Card” is still newly established but has already attracted millions of users. The Octopus Card is the most successful e-purse to date, which has 98% market penetration in Hong Kong and is the only real multi-application card in existence (Whitwell, 2005). However, because it is still new and has boomed early, problems associated with its system are being taken for granted. There is lack of investigation on the problems associated with the e-purse, as well as other concerns of the user.

Chan (1997), in the late nineties, explored the effects of credit cards to individuals in Hong Kong. The analysis of the study focused on two types of credit cards: bank credit cards and retailer credit cards. In the study, Chan (1997) also stumbled on the topic of concept of money spending of individuals in Hong Kong. According to his investigation, the traditional attitude of the people is that money should be ‘saved for the rainy days’. Debt or borrowing money is shameful because most are afraid that they cannot pay back the money. This type of attitude is more evident on the working class with low income (Chan, 1997). However, it does not deter the acceptance of new money concepts but only delayed it. On the contrary, Chan (1997) found that the middle and upper class in Hong Kong had no problem accepting new spending concepts because of their realistic attitude in adopting new technologies. In general, users of credit cards are mostly within the age group of 18 to 22 during that time, usually university students.

Regarding its effects on individuals and families, there has been a high trend of having too much credit debt (Chan, 1997). There were reports of people hiding from their families, committing suicide, had their house chained, and families burnt alive by the debt collector (Chan, 1997). Another problem is fraud and security. Credit card transaction is a technical matter where the cashiers use electronic devices from confirmation. The development of new technologies helped strengthen security from fraud but hackers are also using the same modern technologies. Frauds such as financial loss as a result of card being stolen and counterfeit cards are some of the common problems (Chan, 1997). Frauds can basically cause the financial industry billions of dollars if left unattended.

Worthington (1995) stated ten years ago that what smart card technology offers is the possibility of putting all three types of payment options, pay later, pay now and pay before, on to the one card. However, Worthington (1995) expressed some concerns on the adoption of the new smart card. He stated that educating and enticing cardholders away from their existing payment media on to the use of just one piece of plastic is one of the problems. Worthington (1995) also stressed: “Who provides such a card and who the consumer chooses to have such a relationship with are both critical issues for the current and aspiring providers of financial services” (p.40).

Proposed Methods

The research design that will be used in the study is the ‘research process onion’ to ensure that it will scope and acquire all the necessary information needed to explain the smart card phenomenon in Hong Kong and its implication to the society. The research process onion is a layer by layer step to peel certain procedures that will lead to the development and progress of the research. The first layer raises the question of the research philosophy to adopt, the second considers the subject of research approach that flows from the research philosophy, the third examines the research strategy most applicable, the fourth layer refers to the time horizon a researcher applies to his research, and the fifth layer is the data collection methods to be used (Saunders et al, 2003).

The research process onion design was chosen because it is more systematic than any other design available. Furthermore, it can show the whole process of the research in a glance and can guide the research thoroughly because of its step by step style (see Appendix for example).  

In the study, the research philosophy to be followed is positivism. With this research philosophy, a researcher prefers to work with an observable social reality in order to come up with law-like generalisations similar to those produced by the physical and natural scientists (Remenyi et al, 1998), and in this tradition, the researcher becomes an objective analyst, coolly making detached interpretations about those data that have been collected in an apparently value-free manner (Saunders et al, 2003). On the other hand, the research approach to be used is multi-method. The advantages of using this are: first, different methods can be used for different purposes in the study so as to gain more confidence that one is addressing the most important issues, and the second advantage is that it enables triangulation, or the use of different data collection methods within one study.

In terms of resources, the data will be acquired from journal databases and traditional libraries in Hong Kong. Furthermore, data can also be acquired from financial service institutions such as the Octopus. To be considered data are information related with the development of Smart cards in Hong Kong, with emphasis on the Octopus, specifically people’s views toward it i.e. the society and the providers of the service. Thus, literatures are the primary data of this dissertation, while secondary data are surveys and interviews. The idea is to expand the topic and to explain it, which is why literatures are the primary data.

Reflections

Obstacles

Basically, there are a few practical and empirical obstacles in this dissertation. However, those concerns should be treated early because it might hamper with the progress of the study. The first practical concern is the expensiveness of acquiring journals online. This is a practical concern because monetary costs are one of the main important factors that will keep this study going. However, the university library can be a good alternative to counter this problem. Another practical obstacle is the availability of resources regarding smart cards in Hong Kong. Online journal databases such as Emerald only contains studies of smart cards in Europe and in the United States. Limited local references can affect the development of the study. On the other hand, in terms of empirical obstacles, there might not be enough statistics to show how prevalent smart card usage in Hong Kong is – or perhaps there is difficulty obtaining them from financial service institutions. This is where secondary research will come to play. The surveys and interviews to be conducted with some Hong Kong families and smart card providers are meant to build bridges that will lead to the acquisition of important references. Overall, resources and cooperation are the two major obstacles in the study.

Conceptual and Theoretical Problems and Difficulties

The input-process-output model, the framework to be used, is compatible with the study because of its simple structure. The input will be the literatures that will be collected from different online databases. This also includes the secondary data that will be acquired from financial service people and families using the smart card. The difficulty will logically be on the process of the model. The process is the analysis of the data collected and will prove to be difficult because of the different issues that the study might face. Information to be acquired should be arranged conveniently so that they can be analyzed more efficiently. The effective execution of the process will be the main importance of the research because it will determine the quality of the output.

Ethics

First, ethical considerations will be applied on the respondents of the study for secondary data. Surely, most of them would be hesitant to share their views because of certain factors they are afraid of. As an ethical stance, confidentiality of the respondents’ identity and participation will be ensured throughout the research. Furthermore, important but confidential information that respondents do not want to leak will also be respected. On the other hand, plagiarism of literatures will be avoided at all times and information will not be manipulated to acquire the desired results.

Position as a Researcher

The position of the researcher in this study is crucial because it is he or she who will conduct the whole process of the study. Furthermore, the study is under the political field because smart cards encompass many laws and regulations from the financial sector, as well as reports that could be confidential or not. The role of the researcher is to attain the necessary information needed in the study as much as possible, and to create connections with important people who will be helpful in little and general progress of the study.

Conclusion

This dissertation aims to explore the use of smart cards in Hong Kong such as the “Octopus Card” and discover its implications or impact to society and financial institutions. The topic is general but is expandable in a sense that it will scope everything about smart cards, as well as everything about its impact to families and to those who provide such service. The immediate next step to be done is to find a couple or more issues about Octopus card use in Hong Kong, and from there, decide the start of the study. Basically, more literatures research is needed to be conducted particularly about current reports on smart cards or Octopus card in Hong Kong. The problem is that there is little that people know about the general impact of the Octopus card just like when the credit card was first introduced. This research offers the opportunity to explore the growth of smart cards in the perspective of the authors, the general public, government and the service providers. Hopefully, this research will increase the knowledge of the people about the newly adopted smart cards and will contribute to financial studies. Smart cards are accepted as good financial tools but still lack research in Hong Kong.

Timetable

The study is expected to be finished for approximately one year. The following is the estimated time schedule:

Ø  July – This month involves the approval of the proposal as well as other modifications that should be made with it.

Ø  August – This month will be dedicated to field research, particularly on smart card providers and government institutions related in the study.

Ø  September to November – These months will be crucially for publication materials research for the body of the study.

Ø  December – Half of this month will be research and half of it will be holiday.

Ø  January – Some write-ups will be documented and will be presented to adviser for review.

Ø  February to March – These month are for surveys and interviews.

Ø  April – Partial development of the research will again be presented to the adviser for review. Modifications will be done.

Ø  May and June – Analysis of the data.

Ø  July – Presentation and defense of the study.

References: 

 

Chan, A.C.M. (1997). Impacts of credit cards on individuals, families and society in Hong Kong. In: Caring in the age of technology. Proceedings of the International Conference of Counseling in the 21^st Century. Beijing, China.

Remenyi, D., Williams, B., and Swartz, E. (1998). Doing Research in Business   Management: An Introduction to Process and Method. London: Sage.

Saunders, M., Lewis, P. and Thornhill, A. (2003). Research Methods for Business         Students, 3^rd Ed. London: Prentice Hall Financial Times.

Whitwell, S. (2005). Smart cards: cashing in on untapped market (online).

Available at: http://www.intangiblebusiness.com [Accessed: 07/05/05].

Worthinton, S. (1995). The cashless society. International Journal of Retail & Distribution Management, Vol.23, No. 7; pp. 31–40