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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 21st
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, 3rd
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