The Impact of Octopus on Hong Kongs Society

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The Impact of Octopus on Hong Kongs Society

• By Patrick Law
• Supervisor John Paynter

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Agenda

• Introduction to smart cards and Octopus
• Research objectives and questions
• Progress to date
• Preliminarily survey result
• Working Schedule
• Q A

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Introduction to Smart Cards

• What are they?
• A plastic card of set dimensions including a
  semi-conductor enabling the storage and
  processing of information
• Allows processing of information, and storage of
  100 times more information than a magnetic-stripe
  card.
• Maintain one or more databases in offline
  systems.
• More reliable and reuseable

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Usage of Smart Cards
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Major Types of Smart Cards

• Contact Smartcards
• Contactless Smartcards
• Combi Smartcards

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Contact Smart Cards

• A Chip is mounted on the surface of the card.
• Requires insertion into a card reader. For
  example (The Go Rider pass form Stage Coach.

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Contactless Smart Cards

• Built in Antenna
• No need to put into the reader for verification.
• Induce fast and accurate checking mechanism.
  (verified in 0.3 of a second)
• Widely used in the transportation sector for
  rapid transaction. Example Octopus Card in Hong
  Kong.

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What is Octopus - Overview

• Re-chargeable Contactless smartcard
• Largest contactless smartcard project in the
  world (ERG Group)
• Officially launched in September 1997
• Mainly used in transportation and now supporting
  other services.
• More than 7.4 million cards were issued (as at
  May 2001).
• 6 million transactions per day, averaging HK7
  per transaction (Creative Star).
• More than 40 services are supported and still
  growing.
• (Providers currently under negotiation
  includes Supermarkets, petrol stations, taxis,
  minicabs, post offices and more)

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Usage of Octopus

• Core focus on transportation
• All franchised bus routes
• Entire railway network
• Ferries, Tramways, Peak Trams, Minicabs
• Parking meters and car parks
• Targeted on low value, high transaction volume
  business
• Convenient stores
• Fast food restaurants
• Vending machines
• Telephone booths
• School tuck shops
• Entrance to racecourse
• Entrance to recreational venues (35 venues)

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Octopus In Action
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Research Areas

• The impact of Octopus on Hong Kong Society
• Evaluation of the system
• Usage patterns
• Reliability of the system
• Results from loyalty programmes
• Success factors
• Areas of improvement
• A Strategic tool for business?
• The possibility of creating a cashless society?
• One of the consequences of the smart card is
  a reduction of cash money
• (Antonides et al., 1999 European Journal of
  Marketing)
• Implication if similar technology is to be
  implemented in New Zealand

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Research Methodlogy Progress
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Overview of work done so far

• 800 Surveys were distributed
• 507 valid response
• Preliminary results /conducting data analysis
• 2 Franchise Bus Companies
• 1 Railway Company
• 1 Ferry service provider
• 1 Bank supporting Auto top-up service
• 1 Taxi Union
• 2 Bus drivers
• In Progress
• Ran only one so far

Survey
Interview
Focus Group
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Preliminary Results for Survey

• At a glance
• Penetration rate 94
• Most people own 1 card (84.1)
• On average, respondents hold 1.1 cards
• Most people use Ordinary cards
• Card Usage (most frequently used services
  include)
• Bus, Mass Transit Railway and Kowloon Canton
  Railway
• Telephone and swimming pools
• 7-11 stores, Maxim fast food and vending machines
• 58.4 of the respondents use their cards more
  than 10 times per week on at least one transit
  system.

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Preliminary Result Contd

• Card failure Rates
• Card failure rate of 28 was recorded and 59.8
  reported their cards failed 1 time in the past 12
  months.
• Of the cards that failed, 81 experienced it
  failing either 1 or 2 times.
• Top-Up patterns
• 100 was the typical top-up amount
• Most people top up their cards at
• Railway stations
• 7-11 stores
• Self Value Added Machines

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Preliminary Result Contd

• Usage of Loyalty programmes
• Generally speaking, the usage of loyalty
  programmes and schemes was low. 67.2 of the
  respondents did not benefit from any of the
  schemes.
• The most popular schemes were
• MTR loyalty programme
• Bus-Bus Interchange services
• Half-fare discount on Airport Shuttle
• Only 153 respondents reported that they have
  benefited from at least a single scheme.
• No respondents were benefited from more than 3
  schemes.

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Preliminary Result Contd

• Satisfaction of Octopus regarding number of
  services supported
• 60 satisfied and 40 not satisfied
• Most wanted other services to be supported by
  Octopus
• Supermarkets / Chinese markets 84
• Newspaper stand and magazine stands 75
• Road toll 56
• Reliance on the system
• Only 29.2 of the respondents indicated that they
  are willing to pay all their expenses by Octopus.
• Major reason not to do so includes
• Difficult to stop payment / get a refund 37
• Worried about security / financial loss 27
• Doesnt have statements to keep track of
  expenses 26

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Preliminary Result Contd

• Factors that lead to its success
• Respondents are asked to rank a list of factors
  and the results are presented below
• Quick Payment Service 84
• Easy to carry compared to notes coins 75
• Versatile (supporting wide range of services) 58
• Factors where Octopus can be improved
• Improve security features 84
• Increase number of supported services 82
• Improve accuracy rate 73

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Work that needs to be done

• Further data analysis
• Cross tabs and Chi-Square tests to test for
  differences between groups
• Factor Analysis to identify what people think
  regarding to the system.
• Identify possible hypothesis from this
  exploratory study
• Summarise qualitative data collected from
  interview and from newspaper search
• Run more focus groups
• Catching up with the write up and literature
  review
• Refine the title to suit the study

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Working Schedule
Ethics Approval
Lit. Review
Arrange Interview Focus Group
Data Collection in Hong Kong
Data Analysis
Reporting Writing
Mar Apr May Jun Jul Aug Sep Oct
Nov Dec
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Questions and Suggestions?

• Any Suggestions?