What is Octopus Wallet?

If you’re looking to make a splash in the Hong Kong market, catering to local payment preferences is crucial for success. An impressive 98% of Hong Kong residents use Octopus Wallet (yes, even kids) – that’s an incredibly large consumer base to leverage. 

Around the world, cash is becoming a thing of the past, with shoppers favoring digital wallets instead for their convenience and speed. Hong Kong is no exception to the trend, where Octopus is already the dominant way to pay digitally, used by the majority of the population. 

Whether you’re looking to increase your competitive edge in the region or begin your expansion there, it’s vital to understand how a digital wallet like Octopus can transform your business’s chance of success. 

What is Octopus Wallet?

Octopus Wallet is a digital wallet that can be used to make payments at participating online and offline retailers. It’s a stored-value card, which means users need to top it up in order to spend. While Octopus Wallet is local to Hong Kong, every user is given the option of a virtual Octopus Mastercard to spend abroad or with international retailers. 

Launched in 1997, Octopus started as a local contactless travel card, but has since expanded to let users pay for things like public transport, retail purchases, groceries, and online payments through the Octopus app. 

How does Octopus Wallet work?

Users can top up their Octopus Wallet using various in-person and online methods, such as the Faster Payment System (FPS), cash in convenience stores like 7-Eleven, and the Octopus app. This all adds to the convenience of using Octopus Wallet, which in turn makes it a great payment method for merchants to accept. 

When it comes to what users can do with an Octopus Wallet, the options include:

• Pay in-store in Hong Kong by tapping your card
• Pay online in Hong Kong and internationally with the virtual Octopus Wallet Mastercard
• Pay online by scanning a QR code and completing payment via the app
• Send and receive money using peer-to-peer (P2P) payments 
  

While all money held in Octopus Wallets is in Hong Kong dollars (HKD) only, the virtual Octopus Mastercard can be used for in-person international spending with a small foreign transaction fee of 2%, or for HKD payments made online with international retailers, where the fee will be 1%. 

Benefits of accepting Octopus Wallet

There are over 4.5 million Octopus wallets in circulation, a figure that’s too high to ignore. If that’s not enough to convince you of its significance alone, let’s dive into its wide range of benefits below. 

Be convenient

The more payment methods you accept, the more convenient it is for your customers with different payment preferences. For customers who are already familiar with Octopus, which is most of the Hong Kong population, offering them a convenient checkout experience is one less hurdle in the way of their payment. 

Even if they’re not already familiar with Octopus, you can improve customer satisfaction through its convenience and speed. Time-consuming checkouts deter shoppers and lead to cart abandonment, especially when it comes to entering card details. Octopus offers a more seamless experience, reducing friction and speeding up transactions. 

What’s more, the very essence of Octopus Wallet is designed for convenience – a contactless, digital way to pay for public transport and groceries and a friend who’s owed money. If customers can pay for everything they need in a day in one place, then why not add your business to the list? 

Accept more payments 

With every payment method you don’t accept, the more payments you risk losing out on. Increase how “open” your business is to any payment and boost your chances of making a sale by accepting as many relevant payment methods as possible.

The risk of losing business due to not accepting Octopus Wallet isn’t far-fetched in a region as heavily reliant on it as Hong Kong. Add the convenience factor mentioned above, and it’s clear to see how introducing Octopus Wallet to your payment method roster will positively impact your sales. 

Reach more diverse customers

Given Octopus Wallet’s widespread use in Hong Kong, it gives you access to typically harder to reach demographics like kids (Octopus Lite is available from 12+) and the unbanked. Both the growing young population and the unbanked rely heavily on Octopus Wallet to make payments, so you can make your business attractive to a wider audience by tapping into this dominant digital payment method. 

Beyond the young and unbanked, the tech-savvy demographic like Millennials and Gen Z shoppers are attracted to more modern payment methods like digital wallets. With their significant buying power, you don’t want to miss the chance to appeal to them either. 

Reduce chargeback risks

Paying online with Octopus Wallet has fewer chargeback risks than traditional payment methods, ensuring secure transactions and peace of mind for your business. 

Chargeback fraud, or friendly fraud, is when a cardholder disputes a payment and requests a chargeback even when the payment is legitimate. The request goes straight to the issuer, who wants to keep the cardholder content, so often passes it onto the acquirer. It’s hard to prove whether the payment was legitimate or not, especially when it was digital, meaning cardholders will usually get their money back. If merchants do get to dispute a chargeback, the win rates can be as low as 20%. 

Considering our data suggests that 70% of card payment disputes are fraudulent, this is a huge problem for merchants – who are often liable for the costs. Luckily, alternative payment methods (APMs) like Octopus Wallet are a great solution because of the added authentication and security measures they offer compared to traditional payment methods. 

APMs often exist on mobile devices, where biometric authentication is commonly used for access. Having to enter a passcode or fingerprint to unlock a device reduces the risk of chargeback fraud by making it easier for merchants to evidence the legitimacy of a payment completed on that device. Find out more about how alternative payment methods can reduce chargebacks. 

Checkout.com’s integration with Octopus Wallet as an APM is for online payments only. We cover the details of the app payment flow below. 

Stay competitive in Hong Kong

Ultimately, with such a large consumer base spending with Octopus Wallet, it would be remiss to ignore it as a payment method to accept. Being an early adopter means you’ll stay ahead of the competition and attract new customers with an added layer of trust. 

Get value-added services

Octopus offers various value-added services to businesses, such as marketing and promotional tools, loyalty programs, and data analytics. These can help your business better understand your customers and tailor your offerings accordingly while incentivizing customers to pay. It also gives you the chance to gain brand presence in the Octopus app and website. 

How to activate Octopus Wallet with Checkout.com 

Give yourself a unique edge and stay ahead of the curve by accepting Octopus Wallet as an online payment method with Checkout.com. We’re the first global digital payments provider to offer Octopus as an online payment method for merchants. 

Integrating Octopus payments into your new or existing system with Checkout.com is seamless. Our payment gateway allows you to offer both web-to-app and app-to-app flows, letting your customers choose between a desktop browser purchase experience and a mobile purchase experience. 

In the web-to-app flow, the customer starts making a payment on an online store where we redirect them to the designated Octopus payment page. The customer selects to Pay by Octopus via Octopus App. From there, the customer can either:

• Scan the QR code to open the Octopus App, or
• Enter the Payment Code in the Octopus App 

In the app-to-app flow, the customer starts making a payment on a merchant’s app. They will then be redirected to the Octopus app to verify the payment, after which they will be redirected back to the merchant’s app to see the payment results. 

We facilitate all of this through our Unified API, which lets you easily integrate Octopus Wallet in the API.