HSBC'22 Internationals Case, Final Round

Ingrid Piper prepared this case under the supervision of Dr. Ting Ting Fan and Suresh Balaji for class discussion. This case is not
intended to show effective or ineffective handling of decision or business processes. The authors might have disguised certain
information to protect confidentiality. Cases are written in the past tense, this is not meant to imply that all practices, organizations,
people, places or fact mentioned in the case no longer occur, exist or apply.
© 2022 by The Asia Case Research Centre, The University of Hong Kong. No part of this publication may be digitized, photocopied
or otherwise reproduced, posted or transmitted in any form or by any means without the permission of The University of Hong
Kong.
Ref. 22/730C
Last edited: 25 May 2022
TINGTING FAN
SURESH BALAJI
INGRID PIPER
PAYME: HONG KONG’S E-WALLET
PayMe, the award-winning mobile payment app,1 was very popular among Hong Kong users.
Five years after it was launched, the HSBC-backed payment app dominated the city’s digital
wallet market. Its combination of user-friendly functions and social platform attracted 2.6
million customers in a city of 7.4 million people. PayMe changed Hong Kong consumers’
habits of paying with cash or checks. It was so popular that when users paid merchants or
friends, people naturally said, “Hey, no cash? Just PayMe.”
Despite its initial success in the peer-to-peer (P2P) market, PayMe’s Chief Executive Officer
Dharini Kannan Hemant and Chief Marketing Officer Jaslin Goh believed that the e-wallet
faced tough challenges ahead from nonbanking financial institutions, such as Alipay and
WeChat Pay, two of the largest mobile payment platforms in Hong Kong. Moreover, PayMe’s
expansion in the peer-to-merchant (P2M) market proved difficult. Although the two HSBC
executives wanted to expand PayMe’s share of the P2M market in the city, local merchants did
not initially see the app as an essential payment method.
Both executives wondered how PayMe could grow its consumer and merchant markets and
monetize its products and services. Dharini and Jaslin knew they only had a short time to come
up with solutions. “I’ve got to go to the board in a few months and tell them where we are going
to take this product,” Dharini said. How should the two executives take PayMe to the next level?
Hong Kong’s Payment Market
In 2016, the Hong Kong Monetary Authority (HKMA) released a limited number of stored
value facility (SVF) licenses,2 which enabled nonbank financial institutions to provide digital
wallets and mobile payments to Hong Kong residents. When HSBC obtained an SVF license
and launched PayMe, the bank knew the start-up’s team faced a challenging mobile payment
1 Hong Kong ICT Awards 2022, “2018 FinTech Grand Award,” https://www.hkictawards.hk/award_en.php?year=2018&aid=3,
accessed 18 January 2022.
2 “Register of SVF Licensees”, Hong Kong Monetary Authority, https://www.hkma.gov.hk/eng/regulatory-
resources/registers/register-of-svf-licensees/, accessed 27 April 2022.
This case is for use in the HSBC/HKU Asia Pacific Business Case Competition 2022 only.

22/730C PayMe: Hong Kong’s e-wallet
2
market in Hong Kong. Although the city was one of world’s top financial centers, mobile
payments represented only a very small portion of the payments market.
At that time, many small local merchants accepted only cash. When people made e-payments,
they used credit cards or an Octopus card—a stored value card—for travel on the city’s Mass
Transit Railway (MTR), ferries, and buses, or to make small payments at convenient stores,
cafés, and restaurants.
Although the city’s young people quickly adopted PayMe, older citizens continued to use cash
and credit cards and were not interested in digital payments. As 52.5% of Hong Kong’s
population was over age 45, PayMe needed to overcome this considerable challenge in order to
gain a larger market share. Merchants were also not keen to join the e-wallet because they
already accepted credit and Octopus cards as payment for goods or services [see Exhibit 1].
PayMe also faced competition from other noncash payment methods. One of its major
competitors was the widely accepted Octopus card, which had dominated that market since it
was launched in 1997. The card was used across most public transport (MTR, buses, and ferries),
and was widely accepted by many merchants. This included around 1,000 7-Eleven
convenience stores in the city,3 supermarkets, and even restaurants. The card was so widely
accepted that it was a vital part of people’s everyday lifestyle.
Even in the digital payment segment, PayMe was not the first or the strongest player in Hong
Kong’s SVF market. The world’s largest mobile payment platforms, Alipay and WeChat Pay,
had entered Hong Kong’s SVF market before PayMe [see Exhibit 2]. PayMe’s competitors
used expensive marketing campaigns and incentivized new customers with rewards and
coupons when they used their e-wallets for the first time—a move that encouraged consumers
to use their e-wallets. The top-three e-payment platforms used in Hong Kong were Alipay
(68.4%), PayPal (48.5%), and WeChat Pay (42%) [see Exhibit 3].
HSBC in Hong Kong
HSBC had a long association with Hong Kong, where it was founded in 1865 as The Hongkong
and Shanghai Banking Corporation Limited. Now regarded as one of the world’s largest
banking and financial services organizations, it serviced around 40 million customers in 64
countries and territories in 20224.
With headquarters in London, the bank’s global business had assets of USD2.958tn5 as of
December 2021, across Commercial Banking, Global Banking and Markets, and Wealth and
Personal Banking business units.
Although it was one of the largest global banking and financial service providers, Hong Kong’s
younger generations regarded the bank as old and outdated. They believed HSBC’s services
suited their parents or even grandparents’ needs, and they were also reluctant to use its services
because they felt the bank was not tech savvy.
Before it developed PayMe, HSBC offered users a mix of traditional payment products such as
credit and debit cards, together with their associated apps. However, the bank did not provide
3 T. Van, “7-Eleven opens 1000th
store,” Inside Retail, 12 July 2021, https://insideretail.asia/2021/07/12/7-eleven-hong-kong-
opens-its-1000th-store/, accessed 18 January 2022.
4 “Who we are,” HSBC, https://www.hsbc.com/investors/results-and-announcements, accessed 27 April 2022.
5 HSBC, 2022 Annual Report, https://www.hsbc.com/investors/results-and-announcements/annual-report, accessed 27 April
2022.

3
its own e-wallet payment service. When the HKMA issued SVF licenses, HSBC realized that
if it did not act swiftly, it would lose an important local market to competition from nonbank
financial services. Even though it held a leading market position across the city’s retail banking
sector, HSBC realized that potential new and young customers were attracted to financial
services that offered e-wallets. To capitalize on that market opportunity, HSBC decided to
create an e-wallet payment system that differed from its competitors.
PayMe: Smooth and Seamless
Kevin Martin, Group Chief Operating Officer of HSBC Wealth and Personal Banking, said
HSBC assembled a 250-member team in 2016, with expertise in product development, IT, and
marketing to create a digital wallet for the Hong Kong market, which solved an important
problem––how to make small payments without cash or checks.
Before PayMe entered the market, there was no easy way for people in Hong Kong to transfer
money to each other. For example, when a group of friends went out for a meal, it was often
socially awkward and difficult to split the bill. Diners carried cash to repay small amounts of
money to their friends. Or they waited a long time while staff split the bills across several credit
cards.
The PayMe team’s solution was to design an e-wallet that was simple to use and included a
social element that allowed users to share both money and messages among their friends. [see
Exhibit 4] In February 2017––just 100 days after the team was formed—the HSBC-branded e-
wallet PayMe was launched in Hong Kong. The new digital payment platform specifically
targeted the peer-to-peer (P2P) market.
Unlike other e-wallets, the team designed the app so that users could easily transfer small
amounts of money to each other. It took just three steps to transfer funds. Customers chose who
they wanted to pay, entered the amount they wanted to pay, and then confirmed their payment
with either password or biometrics.
Users could add money to the e-wallet via their personal credit or debit cards. Although PayMe
was supported by HSBC, it did not require customers to have an HSBC bank account, so anyone
with a local bank account and mobile phone could use PayMe. This flexibility attracted new
users to the e-wallet and also built a new customer base for HSBC. Around 30% of users were
both new and young non-HSBC customers.
The combination of convenience and simplicity proved a winning formula. A year after it was
launched, PayMe won the Hong Kong government’s 2018 Fintech Grand Award 6 for
innovation. The judges commented: “PayMe is a well-developed application that is very user
friendly. Its social aspect to payment is very appealing in [the] local market, satisfying customer
demands especially for the Millennials. With the high signup rate and a clear development
roadmap, PayMe will be a leading social payment solution in Hong Kong.”
Peer-to-Peer Market
The initial success of PayMe was attributed to its simple, user-friendly design and the team’s
smart marketing strategy that targeted the P2P market.
6 Hong Kong ICT Awards, https://www.hkictawards.hk/award_en.php?year=2018&aid=3, accessed 18 January 2022.

4
As consumers found that PayMe solved their payment problems easily, the team only needed
to spend a minimal amount on marketing to convince users to install the app and transfer money.
P2P payments naturally had an important social element—to pay or get paid, both those who
paid and those who received the payment needed to be PayMe users. Once a consumer used the
app, their friends and family also started to use the e-wallet, and within a very short time, a
network of users was created, and the number of consumers who used the e-wallet grew
exponentially.
To enhance its social aspect, the team’s designers allowed consumers to chat with their friends
and send emoji in a similar way to Facebook or Twitter. That feature appealed to users because
it encouraged a sense of belonging to a social community among its predominately young users.
The combination of smart design and a social community attracted more than a quarter of the
city’s population of 7.4 million to become PayMe users. The e-wallet became so popular it also
reshaped young users’ perceptions about the bank––They no longer saw HSBC as “the bank
that my father used.”
Peer-to-Merchant Expansion
PayMe’s growth was funded by HSBC, and as it grew, it needed to meet key metrics. One was
monetization. The digital wallet did not charge fees to P2P consumers. Although that feature
made it popular, PayMe needed to charge users for its services. The team realized that if
merchants were charged a transaction fee on transactions, the e-wallet had the potential to
become profitable.
PayMe executives decided to expand into the P2M market. They initially thought it would not
be too difficult to attract merchants to the platform, since merchants would want to access the
marketing opportunities afforded by the 2.6 million PayMe consumers. However, expansion
into the P2M market proved to be a greater challenge than the P2P market had been. The team
found it difficult to convince merchants to sign up to a new payment method because they were
already affiliated with traditional payment methods such as debit and credit cards.
To change PayMe’s growth trajectory, the team’s executives made five strategic changes [see
Exhibit 5]:
1. PayMe rebranded
To pivot from the P2P to P2M market, the team decided to reposition PayMe as Hong
Kong’s “own e-wallet.” The team created a citywide campaign that promoted PayMe and
PayMeow (the app’s cat mascot). The marketing campaign used the 23-year-old Hong
Kong celebrity, actor, and singer Keung To and leveraged an MTV video that featured
PayMeow and Keung To.7 Their YouTube video went viral and was watched over 3 million
times by April 2022. It generated three times earned or free media investment worth more
than HKD8mn (USD1.019mn) from print and social media. The campaign was so popular
that fans danced outside HSBC’s Hong Kong headquarters when the advertisement was
displayed there as a light show, and the PayMe jingle remained popular months after the
campaign ended.
2. Gamification
To engage more young users, the team developed a game called Spin and Win a Dimsum,
which made the PayMe app a cool, fun “in-apps experience” that was very popular with
7 https://www.youtube.com/watch?v=gXsqlbw-CdY&ab_channel=HSBCHongKong.

5
Millennials and the Generation Z (Gen Z) age group (those born between 1997 and 2012).
Gamification increased users’ spending frequency and the average amount spent to more
than HKD300 (USD38).8
3. Partnerships with large merchants
PayMe’s team also collaborated with large merchants such as the fast-food chain
McDonald’s to promote a citywide marketing campaign. People who used the app to pay
for their meals at McDonald’s stores or used McDonald’s app were rewarded with coupons.
As McDonald’s operated 245 restaurants in Hong Kong 9 and attracted many young
customers, the collaboration proved very successful and increased the number of daily app
users and transactions for both parties. PayMe also peaked as the top e-wallet in the Hong
Kong market several times during the campaign.
PayMe also partnered with other merchants, such as 7-Eleven stores, the Maxims restaurant
group, and Mannings retail stores to target off-line shoppers. The team also collaborated
with e-commerce merchants, including HKTVmall, one of Hong Kong’s largest online
shopping networks, and FoodPanda, a major food delivery service [see Exhibit 6]. The
collaboration helped make online purchases easier and increased sales and the number of
users of both PayMe and its e-commerce partners.
4. Greater exposure
To increase PayMe’s exposure, the team created point-of-sale marketing that included its
logos on the checkout tables and cash registers of small merchants. Although these
transactions were not large, PayMe’s distinctive red stickers were seen by every customer
who visited these micro stores and were a source of free advertising.
5. Master merchant network
In addition to the e-wallet’s own network, PayMe’s executives decided to fast-track its P2M
strategy through partnership within the Master Acquirers network (e.g., Global Payments
and EFT) to grow its merchant footprint more rapidly. By April 2022, it had acquired more
than 34,000 merchants’ points of presence through a combination channel growth.
PayMe’s Future Options
While these efforts increased P2P and P2M users, to grow the market and speed up
monetization, PayMe’s executives needed to take the e-wallet’s development to the next level
within three to five years. Dharini and Jaslin believed the app still offered untapped
opportunities and possibilities. The two executives discussed the following options:
1. Should PayMe become a social ecosystem? PayMe’s unique social element helped it
capture millions of P2P users and expand into the P2M market. The executives
wondered if PayMe needed to further enhance its social features and build a social
ecosystem. For example, should the app become a social platform that allowed people
to send Red Packets (known locally as “Lai See”) during Chinese New Year
celebrations or weddings—a popular local custom in which well-wishers placed money
inside decorative red envelopes. Or could this unique social feature encourage more
merchants to join PayMe if they participated in PayMe promotions during Chinese New
Year?
8
USD1=HKD7.84 on 29 April 2022.
9 McDonalds, https://www.mcdonalds.com.hk/en/about-us/, accessed 18 January 2022.

6
2. Should PayMe expand its digital services to other areas of everyday life to become
indispensable to its users? For example, what if PayMe expanded operations to include
local transport so that it paid for taxi, bus, or MTR fares, or could the e-wallet be used
to pay monthly utility bills? This strategy had the potential to attract new users as well
as increase “user stickiness” –– as the executives believed loyalty was a powerful
weapon against competitors.
3. Should PayMe focus on Gen-Z consumers? Although young consumers often did not
have any income of their own, PayMe’s executives believed there was enormous
potential to capture this age group and gain their loyalty. If the team secured that group
early on in their lives, the e-wallet would continue to be their preferred payment method
when Gen Z became adults. The executives believed they could target pocket money
and encourage parents to place their child’s pocket money in a PayMe wallet. If PayMe
also worked with companies where Gen-Zers spent their pocket money, for example
online gaming companies, this also increased their P2M payments.
4. Should PayMe become a virtual bank that provided investment products? As P2P users
often left money in their e-wallets, should the app offer users simple investment
products, such as a virtual savings account, which earned users a small percentage of
interest? Another option was to become an online personal finance service similar to
SoFi, a US-based company that provided credit, loans, mortgages, and investment via
its mobile app. How could the team use around HKD2bn held in HSBC’s e-wallet to
monetize the app?
Since online trading of stocks and funds was increasingly popular with young
consumers, this strategic move also had the potential to attract new users and increase
“user stickiness”. However, this strategy meant PayMe risked competition with other
fintech products in Hong Kong such as the e-trading platform Futu, which offered its
users aggressive discounts on the fees charged.
5. Should PayMe expand globally? PayMe was developed only for users in Hong Kong.
Although it had a large local market share, Hong Kong was a small market compared
to global opportunities. To sustain long-term growth, should PayMe expand
elsewhere in the world? Once the COVID-19 pandemic eased and international travel
normalized, was it possible for the e-wallet to enter the international market where its
parent company—HSBC—had strong global connections?
PayMe achieved remarkable success in a short time. With only minimum marketing
expenditure, it had revitalized HSBC’s image and captured a significant number of new users;
nearly half of these were under 40 years of age. It had also grown quickly in the P2M market.
Around 25,000 merchants and stores accepted PayMe, and it had captured around 75% of
market share in Hong Kong. “PayMe is on a growth trajectory, and we are looking for the new
path of growth,” Dharini said. “But what’s next for PayMe? What steps does PayMe need to
take to build on our success to date?”

7
EXHIBIT 1: DIGITAL PAYMENT ACROSS AGE GROUPS IN HONG KONG
The study was conducted by VISA company on an online panel of 500 consumers of 18-65 years old in early May 2019.
Source: “The Future of Commerce: Consumer Payment Attitudes Study 2020,” Visa, https://www.visa.com.hk/dam/VCOM/regional/ap/hongkong/global-
elements/documents/visa-whitepaper-hk-final-compressed.pdf, accessed 27 April 2022.
91%
80%
61%
58%
40%
36%
28%
75%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Cash Credit or debit card Contactless card Mobile contactless In‐app mobile wallet P2P QR code Octopus
Hong Kong

8
EXHIBIT 2: KEY PLAYERS IN HONG KONG’S DIGITAL WALLET MARKET
Key players PayMe Octopus Wallet WeChat Pay AlipayHK Tap&Go
Launch date February 2017 April 2016 Early 2016
2007 (service)
May 2017 (app)
July 2015
iOS App Store
rating
4.7 out of 5 4.6 out of 5 4.2 out of 5 4.2 out of 5 2.4 out of 5
Size
Users over 2.5 million Information unavailable Information unavailable 2.7 million Information unavailable
Merchants 869 brands Information unavailable 263 brands Information unavailable
Any store accepting
Mastercard or
UnionPay; and 521
brands
Fund-in Source
Options
- Credit card
- Bank account
- Bank account
- Cash
- Octopus
- Credit card
- Bank account
- Cash
- Credit card
- Bank account
- Cash
- Bank account
- Cash
Feature-P2P ✔ ✔ ✔ ✔ ✔
Feature-Split Bill ✔ ✘ ✔ ✘ ✔
Fee Structure
To merchant:
- 1.2% standard fee for
PayMe for Business
app transactions
- 1.5% for PayMe API
or POS terminal
transactions
To customer:
- Fund transfer fee: 1%
of any amount
exceeding HK$3k per
month
To merchant:
- Fund transfer fee:
1.5% for non-
transport; 1% for
transport (e.g. Taxis)
To merchant:
- Information
unavailable
To customer:
- 1.5%-2.5% transaction
fee via credit card or
PPS in AlipayHK
To merchant:
- Information
unavailable
To customer:
- Foreign transaction:
1%-2% of total
amount
- Collection Handling
Fee: 5% of the
outstanding balance
To merchant:
- 1.2% POS transaction;
1.3% online
transaction
Source: Composed by authors from various sources.

9
EXHIBIT 3: MAJOR E-PAYMENT PLATFORMS USED IN HONG KONG (2020)
Source: Y. Ma, “Most popular e-payment services used among respondents in Hong Kong 2020,” Oct 19, 2021, https://www.statista.com/statistics/1106816/hong-
kong-leading-e-payment-services/, accessed 27 April 2022.
7.50%
1.40%
1.40%
1.40%
8.90%
11.60%
15.80%
18.90%
30.80%
42%
48.50%
68.40%
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00%
Others
QQ Wallet
Amazon Pay
Baidu Wallet
Samsung Pay
UnionPay
Google Pay
E‐payment services/e‐wallets from banks
Apple Pay
WeChat Pay
PayPal
AliPay
Share of respondents

10
EXHIBIT 4: PAYME PAYMENT STEPS
Source: Composed by authors.

11
EXHIBIT 5: PAYME’S INTEGRATED BRANDING, GAMIFICATION AND MERCHANT ECO-SYSTEM
Source: Dharini Kannan Hemant and Jaslin Goh, “PayMe HSBC (HKU Case)”, PowerPoint presentation, January 4, 2022, HKU Business School, Hong Kong
SAR.

12
EXHIBIT 6: EXAMPLES OF HONG KONG MERCHANTS WHO ACCEPT PAYME’S P2M PAYMENTS
Source: Dharini Kannan Hemant and Jaslin Goh, “PayMe HSBC (HKU Case)”, PowerPoint presentation, January 4, 2022, HKU Business School, Hong
Kong SAR.

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