FPS has already been launched for quite some time, but there are still many people who don’t understand how to use it. Some questions that I have come across include: What is the upper limit of FPS? How do I register for FPS? What are some of the uses and vulnerabilities of FPS? In this article, I will explain the advantages and disadvantages of FPS.
- How do I use FPS?
- Advantages of FPS
- Limitations of FPS
- A comparison with other payment platforms
FPS stands for “Faster Payment System” and was implemented by the Hong Kong Monetary Authority (HKMA). FPS solves the previous problem that prevented individuals from conducting instant transfer between banks. Now, you simply need to register with your bank and enable FPS. You no longer need to queue up at your local bank or ATM to transfer money nor have to wait for several days to transfer money to the other party’s account. However, although there are many digital wallets that support instant transfer, it is still necessary for both parties to be using the same digital wallet. Otherwise, instant transfers will not work.
FPS registration is quite straightforward. You simply need to enable FPS in online banking or in your bank’s mobile application, register with either your mobile phone number or email address according to your bank’s instructions, and then input the verification code. The registration method is the same for both businesses and for the general public.
In terms of collection, you only need to set the bank as the default receiving bank when setting up FPS. After that, the payment will be automatically transferred to the designated bank account. Unlike PayMe and other digital wallets, the money will be stored in a virtual account. If you want to transfer money, you can go to the online banking website or log on to the banking app and input the phone number, e-mail address or the FPS identification code of the other party. Then, you can withdraw money from your bank account for the transfer without having to input a lengthy bank account number as in the past.
Simplicity and efficiency can be said to be the main advantages of FPS. Whereas previously you would have to wait in line at your local bank in order to transfer money, now, you can simply use your mobile phone and input the phone number or e-mail address of the transferee from anywhere, at any time.
In addition to the added personal convenience, FPS also has many advantages for businesses. Besides enabling C2C account settlement, FPS also helps companies engage in B2B and B2C account receivables and transfers. The HKMA has set a common standard for the QR code-shared by participants in FPS, which allows merchants to use a variety of different payment methods. Merchants simply need to post their O!ePay, AliPay HK, or WeChat Pay QR codes, and customers can scan the QR code, facilitating money transfers without having to use a credit card or the same digital wallet. The merchant can use FPS to collect money quickly without having to pay huge fees for collecting EPS and credit cards. FPS can also be used to transfer money between companies. The transfer is quick, and payment in HKD and RMB are both supported. There is no need to wait for the bank to process the payment and the payment can even be made over the holidays. Finally, you will receive an immediate notification upon successful payment, making business operations less stressful.
In general, FPS is a more convenient payment method. However, it still has certain restrictions that, although have little impact on individual users, are more troublesome for merchants.
The biggest problem with FPS is that the user must have a bank account and the recipient must also either have an account or digital wallet. This is not a problem for individual users but is a problem for companies. In Hong Kong, it is not easy to apply for a corporate bank account and may be difficult for small businesses to successfully do so. It is also hard to manage accounts by transferring funds to individual accounts. When annual accounts are settled, the monthly statements of individual accounts must be submitted to the auditor. Who can remember, from the large volume of funds, which payments have been made by customers and which are private remittances and collections?
Even though FPS is convenient, many people still choose other digital wallets. This is because digital wallets support credit card payment so that you can maintain your cash flow. Instead of spending all your cash at once, you can earn credit card rewards from your money, including points, cash rebates, and AsiaMiles. The same is true for merchants. Compared to individual users, merchants need to give cash flow even greater consideration. Moreover, since a large number of a company’s expenditures are typically attributed to account signing, by using credit cards, companies can earn credit card rewards and save on other expenses. Many expenses such as water and electricity bills, rent, and staff salaries cannot be paid by credit card nor can they accrue credit card rewards. This deprives individual and commercial users of the opportunity to earn more rewards from their everyday expenses.
FPS is still limited to local transfers in Hong Kong. Overseas payments cannot be made nor received, and the only acceptable currencies are HKD and RMB. Due to these restrictions, many commercial users may decide to use other payment transfer platforms. However, more modes of collections mean increased time for merchants to manage the accounts of different platforms. Furthermore, individual users cannot choose to use FPS for foreign currency and overseas transactions. They must resort to the basic methods of bank transfer or use credit cards to pay.
Which platforms can help solve these problems? Here are some of the major ones:
|Fees||Payments and collections are generally free; Visa and Mastercard 2.9% + 2.35 HKD; American Express 3.5% + 0.35 USD||Local customers: 3.9% + 2.35 HKD; Overseas: 4.4% + fixed fee depending on region||Minimum cost: 3.5% + 0.35 USD|
|Buyer’s service charge||No||No||No|
|Support individual users||Yes||Yes, but a separate account is required||No|
|Platform reward scheme||Yes—Reap points can offset the service charge||No||No|
As can be seen from the above table, the services Reap provides are more comprehensive than those of the other two well-known payment platforms, while Reap’s fees are also the lowest. Both individual and commercial users can use Reap to pay various fees with credit cards such as rent, tuition fees, home renovation and repair costs, and employee salaries. Users can also earn additional “discounts” from credit cards that originally could not be used for such payments or that were not able to generate rewards from payment. Reap can also centralize all transactions from different banks on the same platform so that you do not have to log in to multiple platforms to see your expenses and balance. Currently, there is no charge for setting up an account with Reap. Act now to make the most of your money for daily expenses or company expenses!