Aug 25, 2014Last week, after hosting our RFID in Energy, Mining and Construction event in Perth, Australia, I flew to Hong Kong to celebrate my mother-in-law's 90th birthday and to visit some of my wife's relatives, whom I haven't seen since my last visit 17 years ago (I lived in Hong Kong from 1984 to 1992). I had a great time, and it was wonderful to see everyone again. It was also exciting to see how fully the city has embraced the Octopus card, which uses a high-frequency (HF) radio frequency identification transponder.
I traveled by subway, train, tram, bus, minibus and ferry while in Hong Kong, and I paid for each using my Octopus card, which allows users to store funds on the card, deducting the proper amount for each trip. Almost everyone in Hong Kong uses the card. I saw an elderly man climb aboard a minibus (vans that shuttle people on short routes, often from train or bus stations to housing blocks) and pay with a contactless smart card.
According to the Octopus Cards Ltd. website, there are more than 25 million Octopus cards in circulation, which is three times the city's population. The company says more than 99 percent of Hong Kong inhabitants, ages 15 to 64, possess an Octopus.
That's impressive. But what's more impressive is that more than 14,000 retail outlets accept Octopus. There are now more than 67,000 Octopus readers throughout Hong Kong, and 13 million Octopus transactions amounting to roughly US$18 million are processed daily. I used the card to pay for breakfast at McDonald's, to purchase a bottle of water at 7-Eleven, to buy snacks for my kids at a small shop, and to pay for parking at a municipal parking lot.
The reason for the Octopus card's success is that five major transportation companies—the MTR, the Kowloon Canton Railway Corp., the Kowloon Motor Bus Co., Citybus, and the Hongkong and Yaumati Ferry—established a joint venture (known originally as Creative Star Ltd.). The system caught on quickly since the card could be employed for all types of transportation. And since everyone already had an Octopus card in their pockets, it made sense for minibus drivers and small shops to invest in readers and accept it as payment.
The card is not used for large transactions. People don't want to put too much value on the card since if they lose it, it's like losing cash—the next person can use it. It's not meant to replace credit cards. And there are still a few forms of transportation for which you can't use it. Most taxis don't have readers yet, but I suspect it won't be long before they will.
But the card is being utilized for applications beyond payments. Because each card has a unique ID number, it can be associated with an individual. So you can use the Octopus card to get into some buildings and private parking garages. The Hong Kong government is considering emplying the Octopus as a library card, and at least one university is thinking of replacing student IDs with Octopus cards.
Hong Kong has always been a place that embraces change. It was one of the first cities to adopt automated teller machines (ATMs) for withdrawing cash from banks. And when cell phones were first introduced, many people there ran out and bought one. So it's no surprise to me that Hong Kong has embraced RFID for payments. I'm willing to bet it becomes the world's first truly cashless society.
Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.