Full name: NG SIU YING
Student Registration Number: 199046960
Programme Title: MSc in Finance
Module Tilte: Research Methods
Ethical Approval reference number:
Dissertation Supervisor: Dr. Panayiotis Savvas
Title:
Is Hong Kong ready to become a cashless city? Advantages and controversies in electronic
payments.
Introduction:
The concept of a cashless city first appeared in the mid-1950s describing a future in which
physical coins and banknotes would be replaced by electronic transactions (Batiz-Lazo and
Smith, 2016). In recent decades, a growing trend of cashless transactions is observed
especially in countries with rapid economic development. In cashless transactions, mobile
payment is one of the electronic means that constitutes growing popularity. The McKinsey
Global Payment Report (2020) indicated an accelerating shift to mobile transactions due to
the concern of public health arising from COVID-19. As a global financial center, Hong
Kong people enjoy a fast internet speed and a high mobile phone penetration. Yet, the
adaptation to mobile payments in Hong Kong is less popular compared with its
neighborhood regions such as China and India. In this study, I will deep-dive into
investigating
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What are the pros and cons of a cashless society?
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What are the determinants of Hong Kong people’s preferences in cash or
cashless payment?
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How does government support in cashless payment affect people’s adaptation
to electronic payment?
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How does COVID-19 affect people’s readiness to cashless transactions?
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Why Hong Kong is not ready to be extensively cashless in the near future?
Relation to previous research (Theoretical framework):
Plentiful empirical studies have discussed the concept of a cashless society and its
correlation to economic growth, such as the recent studies of Wong, Lau, and Yip (2020)
regarding cashless payment and GDP in OCED countries. The countries with high revenue
growth and coverage of electronic transactions, such as Sweden and China, have raised
researchers' interests to investigate the reasons behind the trend. On the contrary, some
countries, like Japan, show an unusually extensive cohesion to cash (Chang, Chen, and
Hashimoto, 2021). These countries are also under a wide spectrum of studies. As a global
financial hub, Hong Kong is one of the pioneer cities that had adopted electronic payment
systems such as ATMs and internet banking in the early 1970s (Batiz-Lazo and Smith,
2016). Hong Kong also launched its very first electronic payment system: The Octopus
System, for retailing purposes in 1997. However, according to The McKinsey Global
Payment Report (2020), Hong Kong’s growth rate of electronic transactions is a lowerthan-average 10% in 2018-19 while its motherland, China, is experiencing a 56% growth.
Starting up early but being lagged in recent decades, Hong Kong is a city that leaves room
for further research. Therefore, this study aims at discussing what are the drive factors of
Hong Kong citizens in deciding to go cash or cashless and what factors would potentially
alter citizens’ decisions.
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The study will begin with a discussion of the definition, pros, and cons of a cashless
society. In the studies of Fabris (2019), Rivera (2019), and Humbani and Wiese (2017),
cashless transactions constitute low transaction costs, can enhance the convenience and IT
development in means of payment, and reduce shadow economy; while at the same time,
increase the risks of cybercrime and personal privacy leakage. The advantages and
controversies summarized in these studies would be a good reference for my primary study
in which I aim at conducting a questionnaire survey to collect the data directly from Hong
Kong citizens on their perceptions towards cashless payment. Preferences and reasons for
going cash or cashless would be surveyed.
The next identified research question relates to government support. Previous studies have
only narrow discussions on this aspect. A research gap exists. My study aims at finding out
the correlation between government support and adaptation to electronic payments through
studying the Hong Kong government’s policies. The launch of the Hong Kong
Consumption Voucher Scheme through electronic payment in mid-2021 is a good policy to
testify how government support facilitates the development of electronic payment market
through comparing the pre-and post-launching consumption index.
The last research question correlates to a contemporary issue – the COVID-19. There are
rising concerns about public health and the necessity of contactless payments. The research
from Huterska, et al. (2021) has indicated the fear of the COVID-19 and social distancing is
accelerating and reforming payment patterns. This idea will be incorporated as part of my
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research question. The research will conclude the factors driving citizens’ adoption of
cashless and hopefully could provide a forecast and insight to policymakers in future
transition to a cashless society.
Proposed methods:
(1) Primary research: Questionnaire Survey
Reading through the secondary source of research materials, there are discussions about a
cashless society and case studies focused on mainly Sweden, China, Africa, and Japan, but
there is no available research for Hong Kong. To fill in this research gap, I will conduct
primary research of collecting data from government databases and commercial reports;
and will roll out a mixed pattern of face-to-face and online questionnaire with a target
sample size of 200 Hong Kong citizens who are aged between 18-65, from Jan to Feb 2021.
To carry out research with hopefully an extensive educational background, income levels,
and age groups, the target respondents will be friends, neighbors, colleagues from the
workplace, and their family members. I target asking 20-25 questions in the questionnaire
(Appendix A) which includes two major sections. The first part is the collection of personal
data such as gender, marital status, age, educational background, and income level. The
second part will examine respondents’ payment practices, likeliness, and interests in
cashless transactions using the Likert scale and multiple-choice questions. The purpose of
this primary research is to ask the target group tailored questions that can accomplish my
research objective – understanding the perceptions, preferences, and readiness of Hong
Kong citizens towards turning cashless.
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(2) Hypothesis
In a 2016-published study regarding Japan, China, and South Korean citizens conducted by
Miao and Jayakar, the research result indicated the higher the income level and educational
background, the more usage of cashless payments; and it also pointed out elderly’s
unwillingness to learn new cashless payment technologies. Moreover, in the 2021 research
conducted by Huterska et al., the COVID-19 pandemic was examined to impose a
significant impact on the instant need for contactless transactions. Lastly, the 2021 hottest
topic in Hong Kong resides with the launch of the Consumption Voucher Scheme. Unlike
any previous cash payout policies, the government decided to distribute electronic vouchers
this time aiming to boost consumer sentiment and accelerate local economic recovery (the
Hong Kong government Press Releases, 2021). Likewise, my research would base on these
prior research findings and the latest government policy to establish the hypotheses as
follows, and that both descriptive and inferential analyses will be performed to test if the
hypotheses hold in Hong Kong.
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Positive correlation between income level and usage of cashless payments
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Positive correlation between educational level and usage of cashless payments
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Negative correlation between age and usage of cashless payments
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Positive correlation between the fear of the pandemic, social distancing, etc.
and usage of cashless payments
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Positive correlation between government support and usage of cashless
payments
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(3) Analysis
Both descriptive statistics and inferential statistics will be applied in the analysis section.
The collected data will be presented by graphical charts. Mean, median, mode, standard
deviation, frequency distribution, etc. will be applied to summarize the research results.
Likewise, regression models (multivariate analysis) will be compiled, and t-test will be
applied to examine the correlation between the variables, so as to testify if the above
hypotheses hold.
Reflections:
(1) Position as a researcher
I have been working 5 years as a financial analyst in a multinational retailer with regional
exposure in the Asia-Pacific region, thus I am familiar with the latest electronic payment
techniques and payment options in Asian countries. And as a Hong Kong citizen, I am able
to perform direct observations, access government databases, and reach out to Hong Kong
citizens without geographical and language barriers. This favors the feasibility of
conducting data collection for the research.
(2) Limitations
Nevertheless, there are certain limitations regarding data collection and the questionnaire
survey in terms of timeliness and manpower. A sample size of 200 citizens is feasible and
unaggressive but accounts for only a minimal portion of the 7.5 million Hong Kong
population. In addition, a 200-sample size may not include an adequate diversity of income
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level, educational background, and age group. The situation can be improved by extending
the sample size to 1,000. However, the response rate will be a matter by setting up an
aggressive target. Considering the questionnaire is an unrewarding one, respondents’
enthusiasm for participation is low.
To increase data validity and reliability, picking the right respondents matters. Overreliance on responses from friends and their family members, who possibly share similar
payment practices, is not ideal. Ethically, the questionnaire survey gets involved in personal
data collection. In order to protect individual privacy and erase participants’ hesitation, the
survey will be anonymous. Social distancing arising from the fear of public health is a
contemporary obstacle in the research process. Therefore, I will rely on mainly an onlinebased questionnaire. An online survey can potentially increase the coverage of unknown
individuals, which in turn add on new insights from respondents of diversified
backgrounds. Moreover, an online survey is the most productive and cost-effective way of
data collection.
However, an online survey leaves some constraints that potentially compromise the
accuracy and validity of the research results. For a non-rewarding survey, the participants
may lose patience in a lengthy and complicated survey. Unlike interviews, a survey is
basically a one-way communication that the researcher has no control over how
respondents interpret the questions, nor avoids their random hitting of buttons to complete
the survey. To minimize frauds or misunderstandings, a well-planning of survey questions
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and a proper pre-set of multiple choices are fundamental to obtain valuable and adequate
answers to accomplish the research objective.
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Timetable
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References
Batiz-Lazo, B. and Smith, A., 2016. The Industrial Organization of Hong Kong's
Progression Toward a Cashless Economy (1960s-2000s). IEEE Annals of the History of
Computing, 38(2), pp.54-65.
Chang, W., Chen, L. and Hashimoto, T., 2021. Cashless Japan: Unlocking Influential Risk
on Mobile Payment Service. Information Systems Frontiers.
Info.gov.hk. 2021. Government announces details of Consumption Voucher Scheme.
[online] Available at:
<https://www.info.gov.hk/gia/general/202106/18/P2021061800842.htm> [Accessed 5
December 2021].
Fabris, N., 2019. Cashless Society – The Future of Money or a Utopia? Journal of Central
Banking Theory and Practice, 8(1), pp.53-66.
Humbani, M. and Wiese, M., 2017. A Cashless Society for All: Determining Consumers’
Readiness to Adopt Mobile Payment Services. Journal of African Business, 19(3), pp.409429.
Huterska, A., Piotrowska, A. and Szalacha-Jarmużek, J., 2021. Fear of the COVID-19
Pandemic and Social Distancing as Factors Determining the Change in Consumer Payment
Behavior at Retail and Service Outlets. Energies, 14(14), p.4191.
The 2020 McKinsey Global Payments Report. 2020. [online] Available at:
<https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20ins
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ights/accelerating%20winds%20of%20change%20in%20global%20payments/2020mckinsey-global-payments-report-vf.pdf> [Accessed 23 November 2021].
Miao, M. and Jayakar, K., 2016. Mobile payments in Japan, South Korea and China: Crossborder convergence or divergence of business models? Telecommunications Policy, 40(23), pp.182-196.
Rivera, J., 2019. Potential negative effects of a cashless society. Journal of Money
Laundering Control, 22(2), pp.350-358.
Wong, T., Lau, W. and Yip, T., 2020. Cashless Payments and Economic Growth: Evidence
from Selected OECD Countries. Journal of Central Banking Theory and Practice, 9(s1),
pp.189-213.
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Appendix A
Key questions in the questionnaire
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