Wednesday, October 18, 2017

Marching into Hong Kong: Maurer Plays Marco Polo (Part 2)

By IMTFI Director and UC Irvine School of Social Sciences Dean Bill Maurer

The first thing I noticed when coming into Hong Kong from China was that the cab drivers wanted cash. No cab driver was using an app to receive payment. The second thing I noticed was the cash: the HK$100 note is the same size and color as the Chinese 100 RMB note. Instead of a portrait of Mao, it has an image of Chinese soldiers marching into Hong Kong to commemorate the 20th anniversary of the establishment of the Hong Kong Special Administrative Region (HKSAR). Oh, wait, it’s not exactly soldiers. It’s a military marching band, holding musical instruments. Soooo much nicer.

With cash as an everyday reminder of Chinese rule, cash and cards dominate the payment landscape in Hong Kong. Overlooking the harbor we saw a giant lit-up ad for Samsung Pay during the nighttime lightshow, but I never saw anyone use it, and no one I met had ever used it (and several had never even heard of it). Lots of cash, a fair bit of bargaining, and some credit card use. Union Pay ads adorn walkways and public areas, as well as the airport, celebrating your ability to “make your choice” and touting Union Pay’s “global payment network.”

Union Pay ad in Hong Kong.
This seems to be a selling point, at least for now. WeChat Pay can’t be used outside of China by non-Chinese citizens (and I haven’t yet seen any merchant in the US who accepts WeChat Pay – but I’ll be looking, and Rutgers graduate student Jing Wang shared with me this photo of a vendor who accepts WeChat Pay outside of the NYU Stern School of Business!). My Chinese students at UC Irvine are all using WeChat for social networking, chat, news and more. It may only be a matter of time and regulation before WeChat Pay also goes global. When that happens, I have to wonder how much more data might be available to WeChat—and the Chinese government—about residents and citizens of the United States.

Food truck vendor in front of NYU Stern School of Business.
Photograph by Jing Wang, used  with permission
This may be why there is so much interest in Hong Kong—and in China, among those I spoke with—in blockchain technology. While I was in China, the government banned bitcoin and shut down some bitcoin exchanges. Nevertheless, several of my interlocutors in China wanted to know more about the cryptocurrency and blockchain. They were ready to disparage the (ridiculous) monetary theory behind bitcoin, but were deeply interested in the potential use of blockchain for “accountability.”

I was surprised to see a whole display of books (see left) in a non-academic, non-tech, general readership Hong Kong bookstore on blockchain and fintech. I actually bought a copy of a blockchain book—in Chinese, just to have as an artifact of this moment in the history of payment and accounting—at the airport bookstore in Hong Kong (thank you, National Science Foundation).

What are the bigger lessons then? I’m tempted to make some big claims but they’re really too flimsy to stand on right now. Still: maybe the US’s messy, noninteroperable, non-seamless, kludgey payments infrastructures are not such a bad thing after all? Google’s got a lot of my data and the NSA can snoop around in it just as easily as the Chinese government can use machine learning to catch phrases in WeChat conversations or shut down entire groups or circles of payment or make it impossible for you to rent an Ofo bike, limiting your mobility. But if I can’t keep track of my various accounts for the different payment services I use, is my fragmentation across payment platforms a good thing for my liberty?

Mobile payment in its WeChat/Alipay app-based form, so different from the SMS-based world of M-Pesa, crucially depends on government-mandated identity as the base layer on which everything else is built. So maybe there’s something to be said about the line from authoritarianism to app-based mobile payment? And maybe, whenever I’m feeling like a blockchain skeptic, I should look at that HK$100 note to remind myself why a noncentralized, non-government controlled means of accountability might be a good thing.

I can’t thank by name but also can’t thank enough my various interlocutors and guides in China and Hong Kong. Xiè xiè!

All photo credits are by author unless otherwise noted.

Read first post: "Paying behind the Great Firewall: Maurer Plays Marco Polo (Part 1)"

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