Ryan King

Facebook’s Libra cryptocurrency may spell bad news for Hong Kong and mainland payment services – if regulators don’t step in first

HSBC’s PayMe, Hong Kong’s own Faster Payment System, WeChat Pay and Alipay may be among the losers if Libra moves into the peer-to-peer transaction market. Global regulators, however, are already expressing concern

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Facebook executives have said they hope the launch of Libra will expand access to financial services globally, but there are already concerns about how much data it will be able to harvest from users. Photo: Reuters

Ryan King

Published: 7:00am, 29 Jun 2019Updated: 1:28pm, 11 Jul 2019

The internet is buzzing after Facebook’s announcement of its new blockchain and cryptocurrency project, Libra – the company’s attempt to break into the global payments space and establish itself as a major player. The new currency will be managed by the Libra Association, a Switzerland-based non-profit organisation which will include many other members. Facebook also announced a digital wallet application, Calibra, where users buy, sell and trade the token.

Use of the terms “blockchain” and “cryptocurrency” has led to intense debate about what level of threat Libra poses to bitcoin, ethereum and other cryptocurrencies. However, by the strictest definition, Libra is neither a blockchain nor a cryptocurrency, so this is a moot point.

It distracts from the real discussion of how Facebook’s new product will impact everyone. So it would be better to consider what the launch of Libra might mean for Hong Kong consumers.

Facebook has made it clear Libra will first target “peer-to-peer” transactions; that is, smaller payments between individuals. Here in Hong Kong, a great many of these are cash transactions, and given the city’s general preference for paper money, coupled with the high density of ATMs, it is unlikely that Libra will impact this in any meaningful way.

However, one service at risk is HSBC’s mobile payment app, PayMe. In recent years, it has gained traction as a convenient way for Hongkongers to make small payments to friends and family, especially among younger people. Libra has the advantage of requiring only a government-issued ID to start, as opposed to PayMe, which requires users to have either an HSBC bank account or credit card.

Furthermore, Libra can be sent through WhatsApp, Facebook Messenger and, eventually, probably Instagram. Many more people in Hong Kong are registered on these platforms than on PayMe, so it is hard to see people preferring to go through the process of signing-up and adding friends on PayMe when they can just use their pre-existing systems. These two factors may combine to make 2020 a tough year for PayMe.