February 1st, 2011
02:16 AM GMT
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Hong Kong, China (CNN) – Tech analysts in the U.S. are abuzz over predictions that the next generation of smart phones - including Apple's iPhone 5 - will be enabled with so-called cashless technology.

NFC - which stands for Near Field Communication - basically allows two devices to exchange data when they come within a few inches of each other. In Apple's case, it would enable iPhone5 users to simply “wave and pay.”

It's actually not a new technology. Samsung Electronics is already experimenting with NFC in mobile devices in certain markets. And some cities in Asia and Europe have embraced cashless technology for transportation, such as London’s Oyster card, for years.

Here in Hong Kong “wave and pay” has been popular for more than a decade, long enough for it to have become part of daily life.

About 95% of Hong Kong’s 7 million-plus residents use something called the Octopus Card. It can be used not only to swipe and pay on buses, taxis and ferries but at a growing number of retail and service outlets - Octopus says it has 3,000 service partners - including supermarkets, restaurants and gift shops. It can also be used instead of cash at certain hospitals and movie theaters - some even use it to access their apartment buildings.

The tiny chip inside the Octopus card is where the magic happens, and it can be embedded in a variety of products, like key chains, ornaments and watches.

For Hong Kongers, it's old hat. But I just moved here from the U.S., and I'll admit the idea of using a watch to catch the train to work sounds pretty dang cool.

I wanted to see how far I could get in a wave-and-pay world, so I left my wallet and cash at home and spent an entire day using only a prepaid Octopus card in the form of a wristwatch.

For the most part, it worked like a charm. I caught the train to work, bought a Coke from a vending machine, grabbed a coffee from Starbucks, bought groceries, grabbed noodles for lunch, rode the tram home and even had my snapshot taken at a train-station photo booth. Not once did I exchange a single bill or coin.

However, using the watch was tricky at times. It failed to "beep" on first swipe at several different Octopus readers during my adventure. At the photo booth for instance, the watch took about a dozen tries before it was happy.

And what about security and privacy concerns? I mean, do you really want your mobile device keeping tabs on your daily buying habits? When and where you travel, which stores you shop at? In 2010 Octopus faced widespread public backlash when a data leak revealed the company had sold customer data to insurance companies. The embarrassment led a top Octopus executive to step down and the company to promise not to sell customer data in the future.

On the other hand, Hong Kong police have used data recorded by Octopus cards to solve several crimes in the past several years, including a murder case last summer.

As usual, Apple is keeping tight-lipped about its plans for the iPhone. Even if the next generation of smartphones allow for wave and pay, it remains unclear how far the technology will catch on in the U.S. and the rest of the world.

soundoff (14 Responses)
  1. SVA

    This is old stuff. South Korea has this system for ages. You can use your phone to pay for everything – just dangle the thing in front of some screen and you can pay for almost everything. You can even withdraw cash with your phone from the ATMs

    February 1, 2011 at 3:29 am |
  2. Tim

    I think it would be pretty cool

    February 1, 2011 at 4:43 am |
  3. Tom

    Taxis? Um... only 30 taxis accept Octopus payments, at present. We can only hope that the current trial proves to be more successful than the last attempt to introduce 'wave and pay' in taxis in 2006! That said, I seldom leave home without my Octopus. It acts as an access control card to get into my office out of hours, can be used everywhere from 7-Eleven to Starbucks to the Star Ferry and the cinema.

    Weekly grocery shopping, dinner in a restaurant (well, some restaurants), public transportation – I struggle to remember the last time I carried cash. Especially since I have linked my Octopus to my credit card for automatic re-charge.

    The watch versions suck, though. Not only do you look like a bit of an idiot as you twist your wrist around to try to line up the chip with the reader, but when the watch battery runs out you have to send it back to the Octopus company for a replacement. Either that or walk around wearing a useless time-piece.

    Every year they keep promising to unify the Hong Kong card with its equivalent in mainland China, but for some reason that they never quite explain, we're still waiting for that to happen.

    February 1, 2011 at 7:57 am |
  4. daniel

    Really, the world is changing at a fast rate. i think we should slow it down a little bit

    February 1, 2011 at 9:20 am |
  5. Andreas

    There is a similar system in London as well but its only offered by Barclays where your debit card can be swiped to pay in certain restaurants and the same card can be used as an oyster card to swipe on the tube

    February 1, 2011 at 11:51 am |
  6. Peter

    Due to the personal privacy , I think the Octopus card /Watch is better than mobile phone. It is really difficult for the government to know which Octopus card/Watch you hold unless you transfer money to your Octopus card/Watch with credit card. If you have your Octopus value added in cash , the Hong Kong government needs to spend a great deal of effort to find out your identity.

    BTW Hong Kong should be the first city in the world to fully use the smart card payment technology(Octopus system) and this system comes from a private company instead of HK Government. Long Live Free Enterprise !!

    February 1, 2011 at 1:55 pm |
  7. Manuel Vilhena

    Interesting. What happens if someone steals your watch?

    February 2, 2011 at 7:32 pm |
  8. Transolve

    we carrying oyt research on bluetooth for a similar purpose.


    February 6, 2011 at 9:53 pm |
  9. Kirk

    Wow ... this comes off an an American expatriate who has just discovered a different way of doing things ... that may be superior. The reason why I watch the BBC.

    January 9, 2012 at 6:18 pm |
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    Online gift shops are becoming far more popular than first estimated. The convenience and unique choices they offer is a great alternative to the unvarying high street. Because of this more and more people are flocking to their computers to find bargains and items that are distinctive and unusual which with today's fashion and gifting methods is all the rage, to be quirky and different, something the high street can never offer. This unconventional internet exclusivity is creating a great market for creative entrepreneurs who can now put up their pieces and materials for people who have the patience and want to hunt them down and lap up their original designs for friends or themselves.–

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