With Octopus cards, Alipay and other e-payment options so popular and available, why are we still using coins in HK?

With Octopus cards, Alipay and other e-payment options so popular and available, why are we still using coins in HK?

They weigh down our wallets and are impossible to spend, but an economics experts says we still need these coins

coinmaytse.jpg

These coins – 10, 20, and 50 cents – are legal tender, but shops can still refuse to accept them
Photo: May Tse/SCMP

If you carry a purse or wallet, chances are it’s full of cent coins. Stores are constantly giving them out as change, but many will refuse to accept them as payment. So, what are we supposed to do with these pieces of metal?

According to the Coinage Ordinance, a 1994 law, cent coins are legal tender and can be used to pay for things. But as a spokesperson from the Hong Kong Monetary Authority (HKMA) told Young Post, “As in all commercial transactions, both parties can determine the terms of transaction on their own, including the means of payment.” In other words, just because you can legally pay in coins, doesn’t mean shops legally have to take them.

A teenager's guide to the benefits and risks of cryptocurrency like Bitcoin, and blockchain, and how you can profit from them

This is not a new problem. Since 2010, the question of cents has been raised more than once in the Legislative Council. In 2014, the HKMA launched a Coin Collection Programme, which allows people to cash in their unwanted coins in exchange for notes or topping up their Octopus card, in trucks that drive around the city. According to the authority, the scheme has collected more than HK$450 million worth of coins from more than 400,000 people. Last year it was announced that the programme will continue up to 2020; clearly, there is still a demand for coin collection.

Given the situation, it might seem like not using cents anymore would save everyone time and money; but the reality isn’t quite so simple.

The coin issuing office explained that it adjusts the number of coins that are made depending on market demand. It expects that demand to drop eventually, but for now, cent coins aren’t going anywhere; in fact, 100 million 10 cent coins, and 40 million 50 cent coins were newly minted in 2017, the authority said.

The HKMA coin collection programme allows Hongkongers to swap their cent coins for notes or an oyster card top-up.
Photo: May Tse/SCMP

“In the past few years, there has been a slight increase in the circulation of small-value coins, because of increased spending driven by economic growth, and leakage [loss] overseas by increasing numbers of tourists,” a spokesperson for the coin issuing office told Young Post. “With the growing popularity of electronic payments, it is expected that the market demand for small coins will decrease.”

Paul Luk Sheung-Kan is an assistant professor at the Baptist University’s department of economics. He agrees cent coins are on the way out, but not anytime soon.

“In Hong Kong, the general price of goods has risen by 3-4 per cent on average over the last 30 years,” he said in an email. “So, over time, small denomination coins will become unnecessary. The government should kill them at some point – the question is when.”

How to save and invest your money in the Hong Kong stock market

Luk notes that electronic payments such as Octopus card and Alipay (a product of Alibaba Group Holding, which owns South China Morning Post) are becoming more popular, but it will still be some time before everyone’s pockets and coin purses are free of tiny change.

“Some people are reluctant to accept e-payment systems, due to security issues. My hunch is that the city is still far from becoming a cashless society, so in the meantime, we’re still probably going to need small denomination coins.”

He uses public transport as an example of why small change is still useful.

5 tips to help you resist shopping for things you don't need and save money instead

“A bus ride usually costs less than HK$10. If we stop making coins with denominations smaller than one dollar, there will be a problem when bus companies adjust their fares. For example, a HK$3 fare will have to increase by at least HK$1, which is a 33 per cent increase.

“Of course, we could stop issuing 10-cent coins while keeping 20-cent and 50-cent ones, but this is somewhat confusing.”

So, whether you change them, spend them, or simply lose them, cent coins are going to keep making their way into your wallet for a few more years.

Edited by Charlotte Ames-Ettridge

This article appeared in the Young Post print edition as
No time for change?

Comments

To post comments please
register or