Case study: pioneering a new payment solution for China Mobile in Hong Kong

Background
CMHK, the largest telecommunications operator in Hong Kong, is a wholly owned subsidiary of China Mobile, the world's largest mobile network operator by total number of subscribers.

In addition to its physical stores, CMHK enables customers to buy service plans, mobile devices and accessories through its website and mobile application via online payment. Yet traditional collection methods involving payment gateways, including credit cards, Wechat Pay, AlipayHK, Alipay, UnionPay Online Pay and Octopus, have often resulted in a delay of one to two days before funds have credited CMHK’s account.

As a close business partner of CMHK, BOCHK proposed an additional collection channel – FPS – to support instant local transfers from a customer’s account to CMHK’s account around the clock. Leveraging the FPS market infrastructure has created a new cost-efficient payment method within CMHK’s online and offline sales channels, in turn promoting a smart lifestyle to its customers.

Multi-channel solution
BOCHK customised the FPS collection solution to cover all of CMHK’s sales channels. Online, these include its website and MyLink App – CMHK’s lifestyle mobile application. Offline, these include physical store counters and paper statements.

Based on QR code and app-to-app standards introduced by Hong Kong Interbank Clearing Limited, technical features need to be tailored for every channel to ensure a smooth payment process.

QR code generation
Once a sales order is confirmed as being paid by FPS, a QR code is generated, containing payment information unique to each transaction. QR codes generated for the website, MyLink App and store counters are ’dynamic’ – with an expiry date and time so that payments after this deadline are not processed. QR codes generated for paper statements are ’static’ – without an expiry date and time.

Scan & pay
QR codes can be scanned by customers with major banking and e-wallet mobile applications. After scanning the QR code, customers can authorise the transaction on their mobile application and complete payment. Funds are then immediately debited from the customer’s bank account or e-wallet to CMHK’s bank account. BOCHK provides flexibility for CMHK to credit its account by each individual transaction or as a lump sum every day.

App-to-app payment
On CMHK’s MyLink App, once a customer chooses to pay with the FPS app-to-app redirection, the customer can choose from a list of supported banking and e-wallet applications available on the smartphone, and then authorises the transaction via the payment application. Funds are then debited and transferred to CMHK’s bank account.

Transaction notification
BOCHK’s system provides instant notification to CMHK to provide payment confirmation to the customer. The whole process is automated and available 24x7. Transaction data reports are also provided daily for reconciliation.

Online merchant portal
Unlike traditional online banking that shows all transactions, only the FPS QR code and app-to-app transactions are available on BOCHK’s online merchant portal, so that CMHK’s sales and customer service teams can log-in to enquire about FPS collection transactions, generate reports and manage refunds.

Refund transactions
CMHK can initiate refunds on the online merchant portal for original transactions received within the past three years, via a maker-checker-approver process. BOCHK’s system also performs checks to ensure the refund amount does not exceed the original transaction amount.

Solution implementation
The specialised project team formed by CMHK and BOCHK overcame various challenges in implementation. These included, for example: remote communication due to Covid-19; a complicated referencing design for product type and collection channels; and documentation negotiation and a lengthy user acceptance testing (UAT) process.

After over 20 rounds of UAT, QR Code payment on the MyLink App went live in February 2021. Other channels are expected to go live in the next stage.

Unique in its market
Given the rising popularity of B2C e-commerce following Covid-19, payment methods like FPS are highly sought after for being safe, fast and cost-efficient for both consumers and businesses.

With this solution, CMHK has taken a step further to being among the first batch of merchants to launch FPS QR code and app-to-app collections in the market. The benefits are clear: funds collected via FPS are credited to CMHK’s account without any delay and with lower transaction costs involved. As of late March, CMHK had recorded around 200 FPS transactions daily after launching the QR code payment on its MyLink App.

To facilitate the transaction management needs of merchants, BOCHK developed the online merchant portal especially for FPS collections - a novel approach for banks in Hong Kong. In addition, BOCHK invested in its own system to enhance it to lengthen the refund retention period from the 30 days offered by the clearing infrastructure to three years. It did this by initiating a new FPS payment to check the amount and link the data for the original transaction.

Not only has this pioneering FPS collection solution covered all online and offline sales channels; it has also completed the cycle with the online merchant portal and refund requirements. This stands out from other FPS collection solutions in terms of how a bank walks the extra mile for a seamless, end-to-end client experience.