Hong Kong Monetary Authority

The Hong Kong Monetary Authority (HKMA) today (1 August) announced that it will conduct a comprehensive review of retail payments services in Hong Kong. The review will examine in detail the various channels through which retail payments are made and the likely future trends in their utilisation, including the further development of electronic money. It will consider what risks may arise in the operation of these services, whether to the user, to the stability of Hong Kong's financial system, or to public confidence. It will also examine the efficiency, pricing and costs, degree of market access, and level of competition present in the provision of retail payment services and assess whether there are any significant concerns in these areas.

The Review of Retail Payments will be conducted by a working group set up within the HKMA, which will determine the timing and programme of the review and whether external consultants will need to be engaged to assist in the review. The working group will be chaired by Mr James Lau, Executive Director (Monetary Policy & Markets). The Terms of Reference for the review are at Annex A.

"There have been considerable advances in recent years in the technologies available for retail payments, and, consequently, a growing number of different retail payment systems are now available to consumers in Hong Kong," said Mr Tony Latter, Deputy Chief Executive of the HKMA. "The HKMA wishes to learn more about these trends, and about their implications both for the financial system as a whole and for the individual consumer. The review will, among other things, help us determine whether a more developed framework is necessary for overseeing retail payment systems," Mr Latter added.

For further enquiries, please contact:

Caitlin Wong, Manager (Press), at 2878 1687 or
Jasmin Fung, Manager (Press), at 2878 8246

Hong Kong Monetary Authority
1 August 2000

Annex A

1. To review the various channels through which retail payments, whether for goods, services or financial transactions of a retail nature, and whether denominated in Hong Kong dollars or any other currency, are currently effected in Hong Kong and the trends in their utilisation.

2. To consider risks which providers or users may face in the operation of retail payment services, as well as risks to the stability of Hong Kong's financial system as a whole or public confidence; to assess the seriousness of such risks and whether new measures may be required to reduce them or cope with their potential consequences.

3. So far as possible, in the light of whether relevant information is obtainable, to compare such characteristics as the accessibility, costs, pricing and efficiency of retail payments through the different channels which exist, and according to different classes of provider or user.

4. To consider the degree of competition that exists in the provision of retail payment services and to assess whether any deficiencies in competition that are identified operate significantly against the public interest.

5. To consider the implications for efficiency and competition of any further moves towards standardisation, consolidation or sharing in the provision of retail payment services.

6. To consider whether there are significant concerns for regulation or competition arising from the provision of retail payment services by non-financial entities.

7. To consider the direction in which retail payment services may develop in the future - with particular reference but not limited to the implications of electronic payments via the internet or similar means, and electronic cash held on the internet or on cards; to consider how well placed are the technical and institutional infrastructures in Hong Kong to exploit related opportunities; and to identify any new risks which may arise as a result.

8. In all aspects of the review to draw upon experience of other jurisdictions where relevant.

Hong Kong Monetary Authority
1 August 2000

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