On the Horizon
GBA: Embracing E-Payments
GBA: Embracing E-Payments <br/>大灣區見證數碼支付轉型與演變

GBA: Embracing E-Payments <br/>大灣區見證數碼支付轉型與演變

China’s reopening has restored connections across the Greater Bay Area (GBA) and reinvigorated economic activity across the region. However, as businesses look to capture these new opportunities, they are facing a much-changed environment. 

The Covid-19 pandemic altered the way businesses interact with their customers. In every industry, we saw an unmistakable acceleration of digitalization, a surge of new technologies and innovations, and a shift in business strategies. 

The pandemic may be behind us, but these changes are here to stay. In a 2022 study of consumer trends, we found that 76% of Mainland GBA consumers are now comfortable with digital payments, up from 67% in a similar survey year-on-year. More than two-thirds of Hong Kong consumers (68%) are comfortable paying digitally. 

More business payments have moved online, too. For companies across the GBA, digital payments are now an essential part of business. Just as consumers expect to pay through their smartphones, suppliers and business partners are looking for payment in real time. 

This shift to digital commerce also creates business opportunities. It allows companies in Guangdong, Hong Kong and Macau to reach new domestic and international markets, introduce new operational efficiencies, and improve margins by going direct to consumers, rather than relying on wholesalers and intermediaries. The GBA is the right environment to demonstrate just how powerful this opportunity can be. 


Starting Local, Going Global

The GBA itself is already a substantial economy by global standards, with a population of over 86 million, a GDP of close to US$2 trillion and strong policy support for closer economic connectivity. But this area of China also operates with three different legal and regulatory systems – as well as three currencies. That makes it the perfect launchpad for companies looking to grow through cross-border e-commerce: firms can assess marketing strategies and operational processes in a familiar environment before taking their products to the global market. 

There are other advantages to using the GBA as a testbed. In this highly connected economy, contactless digital payments are the norm – not just with credit cards but with a whole host of QR gateways and digital wallets. It is already the main hub for domestic and cross-border e-commerce in China, with pilot areas designated by the central government. According to official data, Guangdong accounts for 23% of China’s online consumer goods sales, by far the largest of any province. Cross-border e-commerce trade value has increased by more than 40 times since 2015.

Underlying this growth, the GBA has the infrastructure to support the continuing shift to a truly digital economy. Household broadband penetration in Hong Kong is 99.5% while mobile subscriptions far outnumber residents, according to the Office of the Communications Authority. Likewise, the GBA is one of China’s most digital regions. Shenzhen alone has 64,000 5G base stations, with another 10,000 set for deployment this year. 


Digital Benefits

As more sales migrate online, the digitalization of banking and payment services will unlock greater upsides for businesses. Central to this is providing access to new markets and new growth. IMF data from 2019 suggested that firms engaged in e-commerce globally export 40% more than those which are not, with this figure rising to 50% in Asia. These numbers have certainly risen through the pandemic.

In addition to reaching new retail and commercial buyers, the rise of digital payments allows companies to create new efficiencies. Digital solutions improve the customer experience and can help boost sales, for example by integrating financial services like buy-now-pay-later functions. 

Behind the scenes, digitalization reduces the cost of processing, reconciling and collecting on invoices, and allows the centralisation and automation of treasury functions. Companies can also use data from these digital payment flows to identify further sales opportunities or enhance their services, as well as to predict their cash flows more accurately. 

Beyond the customer-facing advantages, digital payments infrastructure has significant benefits for risk management. In a 2022 survey of Hong Kong businesses looking to expand in the GBA, companies identified a lack of familiarity with legal or regulatory norms in the Mainland and customer credit risks among the top three challenges. Digital wallets and secure payments networks help overcome major hurdles for companies with international ambitions.

Digital wallets outsource complex regulatory checks and settlement processes on cross-border and cross-currency payments to a specialist. For smaller companies, this lifts the burden of compliance processes, allowing them to focus on growth, while the use of Application Programming Interfaces (APIs), which serve as encrypted communication portals for data and financial information, can alleviate customer credit concerns through automated credit scores or balance checks.


Building a New Normal

With the cross-border B2B e-commerce market in China due to grow almost four-fold by 2025 compared with pre-pandemic times, embracing digitalization will help businesses in the GBA prepare for international growth – and the future. The same tools can help them sell via e-commerce platforms in places from Singapore to Seattle.  

Companies can now enjoy faster payments and more efficient cash flows, as well as access to new sales channels and global markets. The era of digital wallets is here and the GBA will be the proving ground.


Yvonne Yiu, Regional Co-Head of Global Payments Solutions, Asia Pacific, HSBC 


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