With its towering skyline and world-class subway system, Hong Kong appears every part a technologically advanced modern city, yet when it comes to digital wallets, the territory lags far behind mainland China.

Only 47 percent of Hong Kongers use WeChat Pay compared to 86.4 percent on the mainland, according to a report compiled by Tofugear, a company offering digital solutions to retailers, and Wirecard, a digital financial commerce platform. “Hong Kong is lagging behind other markets when it comes to the adoption of new payment methods such as digital wallets,” says Philip Wiggenraad, head of research at Tofugear.

There is a certain level of stasis in the city, with 88 percent of respondents still using cash when shopping in store, while 50 percent of non-wallet users express satisfaction with their current payment options. The enduring popularity of the Octopus card (positive with 85 percent of respondents), which is a stored value smartcard native to Hong Kong, best explains the limited adoption of digital payment platforms such as WeChat Pay or Alipay, although Gen Z and Gen X consumers do have security and privacy concerns with the payment option.

Ninety-nine percent of Hong Kongers aged 15 to 64 use Octopus cards, and many shoppers are apathetic about signing up for new payment methods. Crucially, there is a large overlap between the two payment methods in terms of locations used and the amount users are willing to spend in single transactions.

The report states 72.5 percent of respondents use a digital wallet in supermarkets and convenience stores, yet with over 25,000 citywide outlets accepting Octopus payment, digital wallets are often seen as redundant. “Consumers are satisfied with the convenience and the ease of use of Octopus cards, so there are perhaps fewer driving forces for them to switch to another payment method,” says Rita Li, sales and marketing director at Octopus Cards Limited, in the report.

Residents may be reluctant to use to digital wallets, but with 45.6 million mainland travelers visiting Hong Kong in 2018, the city’s retailers are increasingly catering to their neighbors’ spending habits. And indeed, 50 percent of Hong Kong stores accept Alipay and 91 percent of retailers from the report cited adopting Mobile point-of-sale acceptance as a priority.

The future of Hong Kong payments will likely be a hybrid of cash, credit card, Octopus cards, and digital wallets. But with the number of mainland visitors set to increase following the completion of the Hong Kong-Zhuhai-Macau Bridge — along with the growing ability for Octopus cardholders to connect their cards to WeChat Pay or Alipay accounts — digital payments in the city should grow sooner rather than later.

“There is a huge opportunity for retailers to bridge the gap,” added David Lau, general manager at Wirecard, “by adopting not just an omnichannel approach, but also a digital one.”