An arm’s length evaluation of Octopus

This paper explores the use of Octopus in Hong Kong (HK). There are over 7.4 million cards sold and 7 million of these are active. The study examines how transport and other sectors can enhance their services through Octopus. Six of the 40 organisations using the Hong Kong Octopus card were interviewed. A convenience sample of 800 actual and potential Octopus customers was sent a questionnaire. The use of Octopus was widespread with 94.3% of those sampled. However it is possible that this over-represents the actual use due to sampling bias. All respondents surveyed who bought Octopus, use the services. Most customers were satisfied with the services and would continue to use Octopus. The most frequently used applications were transport (bus, MTR, KCR), purchases (7-11 stores, Maxim Fast food and vending machines), recreation (swimming pools), and other (telephone). The lowest use was for parking meters and school tuck shop. The typical transaction size is $7 per transaction and there are 6 million transactions per day. Most people top-up their cards twice a week, typically at the railway stations, 7-11 stores and by using the self-service machines located at the railway stations. The typical top-up amount is $100. Although the benefits of loyalty programmes are lauded, the majority of respondents do not benefit from them. The schemes offered by the MTR are the most popular (e.g. free meals for regular commuters) and 1⁄2 fare discount on Air Shuttle bus were the most popular of these. Most people who participate in these schemes only obtain their benefit from a single service. Overall the service provided by Octopus has proved to be very reliable. Although 28% of users had experienced a failure within the past year, 60% of these said that it had only happened once. Considering the large transaction volume, these represent a low failure rate. The failures were due to problems with the card, the reader or communications. Most of the users were happy with the number of services supported by Octopus. Potential additional services demanded by people surveyed include supermarkets, bookstores and road tolls. Reasons that have lead to Octopus’ success are that it offers a quick payment service, easy to carry compared to notes and coins and it is versatile in supporting a wide range of services. Reasons for not using Octopus for additional (unspecified) services included: difficult to stop payments/get a refund, worried about security/financial loss and does not provide a statement to keep track of financial expenses. Transport and other sectors should understand the barriers that prevent a customer from registering for Octopus. The two main factors inhibiting the higher adoption of Octopus in HK are that the customers do not need the services provided or supported, and prefer using traditional forms of payment (i.e. cash). Considering these factors in the design and promotion of their systems and increasing the range of organisations and facilities involved in particular should result in an increase in the number of Octopus registrations. Improvements that are needed include improving security features, increasing the number of services supported and improving accuracy rates. The results of the study provide implications for transport and others to improve their services and business strategies involving the use of Octopus.