Carrying around cash is considered an increasingly obsolete practice. Using electronic money, either on cards or through direct bank transfers, is quicker, more secure and cheaper. After all, the overhead of printing and coining money, distributing, withdrawing, counting and depositing is removed.

Banks have launched various cashless payment systems, from credit cards and magnetic debit cards that facilitate direct bank transfers to chip cards that act as electronic wallets onto which electronic money can be loaded. Interestingly, one of the most advanced cashless payment systems today was not introduced by a bank but rather by a public transport firm, over a decade ago.

Octopus
The Octopus Card was launched as a payment system for Hong Kong’s public transport in 1997. Similar to the Oyster card used in the UK and the OV-Chipkaart used in the Netherlands, it is a stored value card, meaning you can load it up with money at special terminals and use the stored money to pay fares. Using radio technology, travelers only have to bring the card close to a reader to check in or out.

The Octopus Card spread rapidly after it’s launch, amongst others because old tickets were made obsolete within 3 months, forcing commuters to switch. And then there was the great 1997 Hong Kong coin shortage, further promoting the use of electronic money. Within a year, 4.6 million cards had been issued. Currently, according to Octopus Cards Limited, 18 million cards are in use and 95% of Hong Kong people aged between 16 and 65 use Octopus.

Not just fares
Soon after its launch and widespread use, various retailers noticed the card’s popularity and adopted the system. Today, the card can be used at PARKnSHOP, 7-Eleven, Starbucks, McDonald’s as well as various other bigger and smaller retailers.

By 2004, all the city’s parking meters were running the Octopus system, and the card can be used for vending machines, pay phones and photo boots. Personalized cards are used to register student attendance and library loans at the University of Hong Kong. Since 2000, the Octopus Card is being monitored by the Hong Kong Monetary Authority, allowing them to generate more than 15% turnover from non-transit related functions. In other words, the Octopus Card has grown from a fare payment system to the most popular payment system in Hong Kong.

Special editions
Over the past years, several special edition ‘themed cards’ have been released, as well as mobile phone covers, key chains and watches with Octopus chips in them. Yes: in Hong Kong you can carry your wallet on your wrist. Also, a special customer reward program has been launched by amongst others HSBC, McDonald’s, UA Cinema, Watsons and Wellcome. Using their Octopus Card, customers can earn points for each purchase that can be used to get special offers.

Will a similar thing happen in the Netherlands and the UK? How long will it take before I can use my wristwatch to park my car and get on the train? And how big are the chances of an outside initiative to open up the world of payment systems?