THE HONG KONG OCTOPUS CARD
Report by: Cian McLysaght, Ying Gao, Xi Chen
Table of Contents
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History of the Octopus Card Development in Society
Society…………………………
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Growth Map of the Octopus Card …………………
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Octopus (Social Constructivism vs Technological Determinism
Determinism……………
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Development of the Octopus Card and the Actor Network Theory
Theory……
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Stakeholders
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Stakeholders………………………………
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Human Actors ………………………………
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Non-Human Actors
Actors……………
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Consequence of Development ………………………………………
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Statistics ................................................................................................
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Background Controversy......................................................................
Controversy......................................................................……
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Individual Controversial Cases...........................................................
Cases...........................................................……
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Conclusions
Conclusions………………
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References...............................................................................................
References...............................................................................................……
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HISTORY OF OCTOPUS CARD DEVELOPMENT IN SOCIETY
There are many cities in the word still using the traditional manual sales ticket system while a
more convenient system (The Common Stored Value Ticket) has been used on the public
transport system in Hong Kong between 1984 to 1999.
Using this ticket, you didn’t need to prepare coins; it has different denominations (from 20 to
200 HK) and different kind for the different ages of users, for example student, senior citizen and
child. [1]
But when using this ticket, you need to put the ticket into the reader and deducted the costs that
you need to pay for the whole travel, it will still takes nearly 30 seconds to complete the process.
According to statistic, there are 10,694,000 people using the public transportation everyday in
1996,[2] So this product seems increasingly unable to satisfy the requirements of users in this
huge social groups, this aspect reflects the social shaping theory that “...technology design
continues in use’ (Suchman)[3]
On September 1, 1997, a new toll system, the Octopus system, appeared in the public
transportation in Hong Kong, but it did not replace the old system immediately. This fact
showing that, when the old technology can not adapt to the new social conditions and satisfied
the demand for human use, social groups will research, development, and use a new technology.
The Octopus system designed by the ERG Group in Australia, and the Octopus card uses the
Sony 13.56 MHz FeliCa radio frequency identification (RFID) chip and some related
technologies, [4] And Hong Kong is the first city of the world that using this technology in major
public transports system. When you take a bus, you just need to take the Octopus card close to
the reader machine, it will deduct the fee that you need to pay from your card. All this process
can be completed within 0.3 seconds at the fastest, and the transaction amount and the balance
will be displayed on the Reader, it’s very fast, convenient, intuitive and greatly reduces the time
of users to waiting for. This improves the efficiency of the public transport system. So, more and
more people chose the way that use public transport for their travel. The Technology made the
human’s life more convenient, and Human’s choices impact by the science and technology also.
And in the first three months that the Octopus technology was issued, the card has sold 3million
units. This data is fully proved that the usefulness, extensive and the degree of public acceptance
of the new technology.
The way of payment by Octopus system was start using in the field of the retail industry that is
non-traffic system in 1999. Some retail stores signed a contract with the Mass Transit Railway
Corporation Limited (MTR) which holding the technology of the Octopus card, and they started
to use the card system in their daily transaction. However, due to the government plays an
important role. Something to use in the marketing must be authorized by the government, in the
social and technological, so if the MTR companies want to extended their business to other fields,
they must be to get the permission of Hong Kong government.
In 2000,the MTR Company obtained the DTC license (Deposit-taking companies license) that
was issued by the Hong Kong Monetary Authority. It Means that this technology which sustain
the whole company has been supported by the Government and it would widely used in the other
social relations. At the same time, there are a huge number of non-traffic business accepted this
technology and started to use the Octopus card, including Convenience stores, fast food
restaurants, vending machine, Cinemas, Swimming pools and so on. In the same year there are a
first housing estates introduced Octopus Access Control System.
The relationship between Social and technological is not one-way, they impact of each other and
shaping of each other. Social group (government, company…) influence the serviceable range of
the technology, and technology also affects the decision of the government in formulates a policy.
June 29, 2003, the Hong Kong government decided to use the Octopus payment systems to
replace the old parking payment system, until November 21, 2004,all the parking POS machine
here are 18,000, replaced by the Octopus system.[5]
From currently we can see the interaction between the technology and society, so it’s hard to say
that technology determinism or social constructivism. They influence each other in the process of
practical. So who decided the entire parking payment system of the city, Octopus technology or
the Hong Kong government? Obviously, that’s both of them.
The merchants adopted the services of Octopus system in Hong Kong is more over than 5,000 by
the end of June 2012, and the circulation of the card is amounted to 2,074 million. [6]We can
make a calculate that the population of Hong Kong is 7 million, by the end of June 2011 [7]
So the average of each Hong Kong citizen is holding two Octopus card at least.
The development and evolution of things is a complex process, Octopus is no exception. Along
with the expansion of the popularity of Octopus card in Hong Kong, The functionality of this
technology not only just on the toll but also extended to the other domains.
In 2008, The Octopus Citibank Credit Card was coming out, it is a first card that has function of
both credit card and Octopus.[ 8]And the Hong Kong Education Bureau associated with MTR
Corporation to development the “Octopus campus management system ". This kind of student
Octopus card could be used to record attendance and borrow books in the library and enter the
campus as a permission. This shows that the initial function of the science and technology that
used to toll (as an electronic wallet) has been changed. So a kind of the card needs to record the
personal information of the user (one of the stakeholders). And it would be cause some social
problems. Some Media reported that the MTR company disclosure of customer privacy. In July
26, 2010, the Hong Kong MTR Company admitted that they was reselling more than 200 million
customer information to other companies, and got the illegal profit of HK $ 44 million. Both of
the traditional media and new media reported this news (The role of the media play in the social
and technology is like a bridge or a bond), and the audience was shocked. So this kind of
relationship between the card (non-human) and the users (human) seems not positive. Of course
the MTR Company (another stakeholders) has to respond for this event in the end because of it’s
human action inside the company caused that. So it is a complicated network between different
actors, they play different role in different situations, made the different decisions and caused the
different consequence.
Even that, the Octopus system is also the earliest development and most successful electronic
payment system in the world. It is a great reference object and an important case for the
development of electronic money systems of the countries around the world. Now the business
of the MTR Company has been developed to other cities in China such as Changsha, Shenzhen,
and the city in other countries like Netherlands, Dubai. [9]
GROWTH OF THE OCTOPUS CARD (1997-Present Day)
Mapping of the Octopus timeline from 1997 to the present day demonstrates the
non-linear proliferation of the Octopus Card technology into a multitude of markets other than
it’s initial purpose as a travel card.
OCTOPUS AND SOCIAL CONSTRUCTIVISM vs TECHNOLOGICAL DETERMINISM
THE DETERMINISTIC APPROACH
We have seen the empirical development of the Octopus Card system, but to properly dissect it
as an entity we must shine different lights upon it, to decipher what factors caused it’s meteoric
growth. First of all we will look at it within the context of Social Constructivism and
Technological Determinism.
If we view the Octopus cards conception and evolution in a deterministic light it can be quickly
diffused as being an inaccurate view of the way society has interacted with the Octopus Card
system.
[10] “The idea that technological development determines social change.” (Bruce Bimber).
If we were to believe that the technological determinism theory drove the development of the
Octopus Card system, then the development of the technology itself would have been a
predictable, pre-destined path and the Hong Kong people would have structured their lives
around this technology. This has not been the case.
The society that it was introduced into, survived long before the card existed, using coins and up
to 1997, a magnetic card system. Coin use was not discontinued when the card was introduced so
the commuter network chose to adopt the technology as opposed to the technology directing the
travel network. A percentage of people however small, still continue to use coins and cash as
payment, so it is not mandatory to use a n Octopus card in order to commute within the city of
Hong Kong.
Initially the RFID Octopus system was intended purely as a more secure and efficient travel card
from an earlier magnetic card. There was a proliferation into other retail areas as the technology
was adopted more by the Hong Kong society. This unexpected growth into other markets
disproves the deterministic stance that the society adopting the technology will follow the
inherent make up of the technology itself.
[11] "Smart Card Case Studies and Implementation Profiles". Smart Card Alliance. December 2003
THE SOCIAL CONSTRUCTIVISM APPROACH
If we look at the Octopus Card system within the context of the Social Constructivism
philosophical approach, it seems a more appropriate approach as it can be demonstrated that
there is more of a social shaping of the technology associated with the Octopus card.
[12] Mackay and Gillespie “….. Users don’t just passively consume technology, but actively
transform it’
This quote is particularly relevant as there was a consumer drive to move from travel only use of
the card system, into other forms of micropayments within train stations, bus depots and subway
stations in the form of using the card in vending machines that were specifically set within these
environments. Octopus orchestrated multiple feedback platforms, namely questionnaires, person
to person on site interviews and internet marketing, within the travel network system to evaluate
customer opinion regarding their services. Octopus noted that the commuter network wanted a
more extensive use of their card technology beyond travel ticketing and micropayments. (Up to
USD$3). The user network began to rapidly appreciate the benefit of this technology as did the
company (Octopus) who owned the company.
It’s our view that a fundamental see-saw between the Octopus technology and the Hong Kong
user network is too simplistic, when we consider that the growth of Octopus was a very complex
process involving many different factors and networks of human and non-human actors. There is
a continuous co-shaping taking place, not only between the user network and the technology
itself but external actors in the form of retailers, restaurants, government, banks etc that have
entered the arena and continue to shape both the technology itself but also the user network,
which in turn re-shapes those actors. This leads not only to a perpetual diversification in the
adoption of the technology, but also to a remodeling of the technology itself.
To truly understand it’s development we adopt the Actor Network Theory approach.
We examine the relationship between clusters of human and non-human actors within the
context, of the Octopus Card development.
DEVELOPMENT OF THE OCTOPUS CARD AND THE ACTOR NETWORK THEORY
STAKEHOLDERS
HUMAN ACTORS:
Octopus Card User network - Commuters, Shoppers, Tourists,
Bus/ Train/ Tram/ Train Drivers,
School kids.
Local Hong Kong Government officials.
Octopus Card Limited Staff
Insurance Companies Staff.
Octopus Card Limited Partners and Shareholders.
Hong Kong Residents.
Police officers.
NON-HUMAN ACTORS:
Octopus Card, RFID Technology, Card Machines, Train/ Bus/ Tram/ Subway Stations, Buses,
Trams, Trains, Minibuses, Restaurants, Retail shops, Public and residential Buildings, Money,
Banks, ATMs, Cinemas.
When we examine the development of the Octopus Card within the context of the Actor Network
Theory (ANT) approach, it can be argued that the principles
of ANT apply to the Octopus Card, from initial genesis, to an organic development and
expansion, into other areas, it was not initially intended for.
It’s important to highlight a few evolutionary details of the Octopus Card when examining it
within ANT.
Initially the Octopus card was conceived as an electronic purse for commuters (Human Actors
within the network). The MTR (Mass Transit Railway) Corporation introduced the contactless
(RFID) smartcard in 1997 (One of many Non-Human Actors) after three years of trials. Prior to
this, Hong Kong had a magnetic plastic fare card known as the “Common Stored Value Ticket”,
which was used on the MTR, Hong Kong railway network, Kowloon-Canton Railway, Kowloon
Motor Bus and Citybus transport network systems. These transport companies can be viewed as
complex clusters of networks, consisting of Human Actors (employees, management,
shareholders etc) and Non-Human actors (transport systems, roads, railways, payment systems
etc).
Once the MTR Corporation introduced the new Octopus Card, it partnered with these other big
transport players in Hong Kong and the Octopus Card platform, widened exponentially within
three months.
Three primary reasons for this rapid adoption of the new Octopus Card. involved a co-shaping
between the human actors (commuters) and the expansive networks that constitute the Octopus
Card corporation. According to the principles if Irreduction/ Relationality, these networks are
interwoven and exist because both exist together.
(1) The Mass Transit Railway and the Kowloon-Canton Railway declared that the old
Common Stored Value Ticket system would be discontinued within three months, so
commuters were somewhat left with no option but to change over or face losing money
on their old cards on the Common Stored Value Card system.
[13] Lucia Siu (2010), "Gangs in the markets: network-based cognition in China's futures
industry",
With close examination there is a free association taking place where the human actors
(commuters) decide upon adopting the new Octopus card to avoid returning to coin use and of
course loss of their current balances on their cards. The commuters can still travel but they would
have to return to using coins so in that sense it was not mandatory to have an Octopus card to
travel.
The goal of the transport companies was for people to adopt the new Octopus card so there was
also a technological mediation occurring here as the network of transport companies are nudging
the commuters to gravitate away from the current Common Stored Value Card by telling the
commuters that they will be worthless within three months so if they wanted to continue using a
‘travel’ card then it was obligatory that they change. Providing a three month period of grace
made the decree less daunting as commuters would have ample time to use their current card
credit.
(2) There was a coin shortage in 1997. It was the year of the “Handover” to China and local
Hong Kongers believed that the Queen’s head coins would appreciate in value so many
people hoarded coins.
[14] Hong Kong Monetary Authority. 1997
This was an anomaly that occurred and was not factored in when the card was introduced. Hong
Kong Monetary Authority. 1997
An interesting aspect of this is that one of the reasons that the Octopus card was introduced was
to cut down on massive handling of coins by the transport companies. Coupled with this there
was the symmetrical advantage offered, that travelers would not need to carry coins, to pay for
transport. Ironically as people hoarded coins there were even less coins left in circulation, to be
used in the transport network. A factor to consider here is the agency shaped by coins. On one
hand redundancy of coins was the goal of the transport companies and as people retained the
coins, it accelerated the adoption of the new Octopus card.
(3) The MTR subway charges were over 10% less if the commuter used an
Octopus Card as opposed to using coin payment to purchase a conventional
ticket.
This had an obvious benefit for the traveler. But one must also consider that it was also
beneficial to the transport companies as they had a massive reduction in coin collection which
involves the logistics of collection, bank deposit and security to name but a few. This resulted in
the reduction of certain human actors and non-human actors within the very complex payment
process network.
Within the first three months over 3,000,000 Octopus cards were adopted.
[15] http://www.octopus.com.hk/about-us/milestones
CONSEQUENCE OF DEVELOPMENT
Over the past 15 years the Octopus Card shifted into other areas of payment. Initially it began
within the environments associated with travel ie vending machines selling snacks and soft
drinks that were located within train stations, bus depots and MTR subways. Subsequently the
umbrella company Octopus Card Limited (OCL) that own the Octopus Card introduced their
payment platform into 7-11’s, WELLCOME & PARK ‘n SHOP (Hong Kong’s two massive
supermarket chains).
OCTOPUS
This service advancement has not only been beneficial financially agreeable for Octopus as they
receive a fee every time their card is used but it is also beneficial from the perspective of
logistics in the case of money handling. Here lies a very good example of the principle of
irreduction/ relationality. (Latour).
This has meant, that previous complex networks of actors (both human and non-human) has been
altered ie there has been an enormous reduction in handling/collecting physical money but
additionally new human and non-human actors have been introduced into the system in the form
of the new technology (cards, technology, scanners, software programmers, maintenance etc).
Physical security (of hard cash) has shifted to virtual security (massive transaction data transfers
both from users personal data and monetary transfers etc).
USER NETWORK
Latours principle of irreduction/ relationality can be observed when we consider the relationship
between the Octopus Card technology and the user network who have employed the Octopus
Card as a means of payment.
The user network can carry one card when travelling. There is no need to go to a ticket machine
and purchase a ticket to use public transport. There is no need to carry coins when travelling. The
process of travel has become less cluttered with these extra activities. According to the transport
department this system has accelerated the flow of people by 20-25% through the bustling city of
Hong Kong.
[16] http://www.octopus.com.hk
As the Octopus card has a loyalty program, individual users gain points the more often they use
the card service. This applies to any time the card is used – whether travelling or in a retail
environment. Redemption and logging of points leads to a whole new complex network of actors
both human and non-human into the current user domain.
STATISTICS
The company witnessed growth corporations can only dream of.
Currently over 95% of Hong Kong people between 16 and 65 have adopted the Octopus card.
There are over 12 million transactions each day valued at over USD$15,000,000.
There are more than 12,000 retail outlets from over 5,400 service providers.
There are over 2.7 million Octopus individuals registered under the Octopus rewards programme.
[17] China Business Centre, Hong Kong Polytechnic University.
BACKGROUND CONTROVERSY
The Octopus Card has had phenomenal success but it has been shrouded in numerous
controversies. In this report we focus primarily on the issue of privacy but some other
controversies are worth mentioning, that have direct associations with the issue of privacy
relating to personal details of the human agents who have adopted the Octopus Card technology.
(1) Octopus Card Limited is owned and operated by a conglomerate of transport companies.
The biggest shareholder of Octopus is the MTR (Mass Transit Railway). The MTR’s
biggest shareholder is the Hong Kong Government, which in turn is indirectly governed
by China. Effectively the Chinese government is the controlling body of Octopus. This
raises issues which could be discussed far beyond the limits of this short report but in
brief the main issues are that the monitoring and supervision of business ethics are
essentially in the hands of the Chinese government. Conceivably there could be a conflict
of interest and lack of impartiality from the government if Octopus Card Limited is being
challenged regarding it’s lack of transparency regarding it’s accumulation of citizens
personal details, considering the main shareholder is the government itself.
(2) Octopus Card Limited has a market monopoly within the realm of electronic payment in
Hong Kong. It is the only existing player. As the government is the main shareholder in
Octopus Card Limited this presents the debate over whether is can be unbiased when
regulating other potential players attempting to enter the market.
INDIVIDUAL CONTOVERSIAL CASES
(1) In July 2010 it was disclosed that Octopus Card Limited had sold 2.4 million customers’
private information (names, HK ID numbers, addresses, phone numbers, email addresses
and importantly USAGE DATA) to large multinational companies for the purposes of
marketing. This only came to light when individuals complained that they were getting
unsolicited marketing calls from some of Octopus’ business partners. Insurance giants
AIA and CIGNA we two of the companies that bought the information. They used the
data for marketing purposes and paid a ‘bounty’ on any successful sales of their products.
If the particular customer was a no-sale then they deleted their data from their database.
The company CEO for Octopus first denied the sale of data but after further investigation
she admitted her early denial was “erroneous”. Octopus made HK$44 million (4.4 million
Euro) from the sale. After intense pressure Octopus made a public apology and donated
all the money to charity.
[18] DELOITTE: Final Report on the Independent Assessment under Section 59(2) of the Hong Kong
Banking Ordnance. 26th November 2010
(2) In July 2007 Octopus was exposed for wrongfully deducting HK$3.7 million from
15,270 customers accounts over a seven year period. Individuals bank accounts were
being deducted even after they cancelled transactions with Octopus. The company has
since suspended it’s EPS (Electronic Payment System) via customers personal bank
accounts linked to the Octopus Card. RTHK News Dec. 2007.
(3) The RFID technology incorporated within the Octopus Card allows the company to store
information on all user activity hence essentially tracking the customers’ physical
location whenever they use the card. Some of the newer features being lauded by the
company is ticket identification in cinemas, parking meters, shops, restaurants, car parks,
building access control in both residential and public offices and schools. Use in schools
is a feature the company celebrates as something that is good for children’s security as
they can be swiped in and out not unlike a clock-in mechanism. Aside from hints of
Orwellian undertones, the government mandates all school policy and as the major
shareholder in Octopus Card Limited there was no political debate when introducing use
of a single source commercial product. This could be argued to be a direct politicization
of the artifact itself.
One recent case where the RFID tracking technology was of major benefit was
in a
case where a suspect in an acid throwing case was apprehended after
being tracked. A
camera in a subway station identified someone holding a bag
similar to one used in the acid
attack. Officers then tracked down holders of
Octopus card used in that station at that
specific time.
Even though the assailant was apprehended there were legitimate concerns
from
the Hong Kong Federation of Trade Unions that were brought to light
when it was revealed
that police can essentially track anyone through a commonplace travel card.
Complaints were filed by Chan Chi-hang (Another Federation member) with
the
Office of Privacy Commissioner for Personal Data regarding alarm over the fact that if police
had access to this information then there was a
possibility that the same information could
fall into the hands of other groups for subversive activities.
The interesting thing here is that the Office of Privacy Commissioner for Personal Data
is in fact a government office, which echoes back to the concern that Octopus Card Limited’s
primary shareholder is in fact the government.
[19] http://www.scmp.com/article/707310/octopus-gives-police-long-tentacles
CONCLUSIONS
Octopus Card Limited has their own running tally of consumer use, in real time as the human
agents pass through turnstiles, buy food, park cars, enter and leave buildings.
As the Octopus Card has grown more popular there’s strong evidence that it’s utility outweighs
its privacy concerns. The human actors in the commuter/ consumer network appear to be either
content to forego on their privacy concerns or possibly the Octopus card network is too
‘blackboxed’ and lacks transparency with the average user regarding privacy information. This is
open for debate and as there is no statistical data available pertaining to this question it is only
something one could speculate on.
However, there continues to be a perpetual diversification of new features and uses as both the
human actor network and the non-human actants afford each other new possibilities. One of the
latest features being trialed is use in taxis. However this has already raised concern as drivers
must return to the office each day for accounting. [20] "Setback for Octopus Card Trial in Taxis in
HK". Life of GuangZhou. 30 October 2006
Already the Octopus Card company, is in the process of introducing automated accounting
systems in the taxi, where taxis don’t need to return for manual accounting on a daily basis.
Another controversy has springboarded from this – Wong Yu-Ting, Managing director of the
Yellow Taxi Group noted that they were “trying to convince retailers and restaurants to offer
discounts” to offer discounts to Octopus taxi passengers. This opens up a complete new network
of actors, both human and non-human as it would require a regulation process between the
retailers/restaurants and the taxi company and the taxi customers. Then there would be the
infinite micro-activities on a daily basis between this whole network and the Octopus Card
network actor. It would obviously trigger a very complex new dynamic.
The transport department is against this for legal reasons.
"Setback for Octopus Card Trial in Taxis in HK". Life of GuangZhou. 30 October 2006
There are now over 20 million cards in circulation. http://www.octopus.com.hk/about-us
REFERENCES
[1]http://www.hkitalk.net/HKiTalk2/viewthread.php?tid=351724&highlight=
[2]http://www.td.gov.hk/tc/publications_and_press_releases/publications/free_publications/annu
al_transport_digest_2000__/average_daily_public_transport_passenger_journeys_/index.html
[3]CS6031.26.09.2012.pdf http://www.csis.ul.ie/coursemodule/CS6031
[4] http://zh.wikipedia.org/wiki/八達通
[5] http://zh.wikipedia.org/wiki/八達通
[6] http://zh.wikipedia.org/wiki/
[7]http://news.163.com/12/0221/21/7QQL80PV00014JB5.html
[8]http://www.octopus.com.hk/about us/milestones/tc/index.html#_yr2008，
[9] http://www.octopus.com.hk/international-business/tc/index.html
[10] “The idea that technological development determines social change.” (Bruce Bimber).
[11] "Smart Card Case Studies and Implementation Profiles". Smart Card Alliance. December 2003
[12] Mackay and Gillespie “….. Users don’t just passively consume technology, but actively
transform it’
[13] Lucia Siu (2010), "Gangs in the markets: network-based cognition in China's futures industry",
[14] Hong Kong Monetary Authority. 1997
[15] http://www.octopus.com.hk/about-us/milestones
[16] http://www.octopus.com.hk/about-us/
[17] China Business Centre, Hong Kong Polytechnic University.
[18] DELOITTE: Final Report on the Independent Assessment under Section 59(2) of the Hong Kong
Banking Ordnance. 26th November 2010
[19] http://www.scmp.com/article/707310/octopus-gives-police-long-tentacles
[20] "Setback for Octopus Card Trial in Taxis in HK". Life of GuangZhou. 30 October 2006