Coercing consensus : unintended success of the Octopus electronic payment system

Leung Sea, Lucia SIU

Research output: Book Chapters | Papers in Conference ProceedingsConference paper (refereed)peer-review

Abstract

This paper contrasts the success and failure of two electronic payment systems in Hong Kong, Octopus and Mondex, during 1996-2002. The case illustrates the new properties of electronic currencies, and provides insights for product designers and regulators. Mondex was endowed with the full legal status of money, launched by a mammoth banking group, with Mondex cards given away for free to consumers. Yet the Mondex system went into oblivion within five years. Octopus started as a modest stored value transport ticket that required a deposit. It ended up as a city-wide multipurpose payment card used by 95% of the adult population. The system has saved significant transaction costs from the handling of coins, generating heavy transactions and turnover volume. The success of Octopus and the failure of Mondex cannot be explained by marketing strategies or technical merits alone. The two systems sought to overcome user resistance in different approaches: Mondex relied on voluntary uptake, but Octopus imposed a compulsory switch upon a large base of commuters. The case shows that in electronic currencies, large merchants and technology platforms are now in a better position to negotiate for what is valid money and what is not. Mondex, a legitimate and trustworthy source of money supply from the banking industry, failed to diffuse across the public. Meanwhile a large merchant group equipped with the point-of-sale device was able to define a new value token for the public. By controlling the material interface of electronic payment, the merchant side is playing a more active role in the loop of social consensus of money.
Original languageEnglish
Title of host publicationProceedings IMSCI '08, the 2nd International Multi-Conference on Society, Cybernetics and Informatics, June 29th - July 2nd, 2008, Orlando, Florida, USA; [consisting of 6th International Conference on Education and Information Systems, Technologies and Applications: EISTA, 4th International Conference on Social and Organizational Informatics and Cybernetics: SOIC, 6th International Conference on Politics and Information Systems, Technologies and Applications: PISTA]
PublisherInternational Institute of Informatics and Systemics
Pages132-136
Number of pages5
ISBN (Print)9781934272480
Publication statusPublished - 1 Jan 2008
EventThe 6th International Conference on Politics and Information Systems, Technologies and Applications: PISTA 2008 - United States, Orlando, United States
Duration: 1 Jun 20081 Jun 2008

Conference

ConferenceThe 6th International Conference on Politics and Information Systems, Technologies and Applications: PISTA 2008
CountryUnited States
CityOrlando
Period1/06/081/06/08
Otherthe 2nd International Multi-Conference on Society, Cybernetics and Informatics, June 29th - July 2nd, 2008, Orlando, Florida, USA; [consisting of 6th International Conference on Education and Information Systems, Technologies and Applications: EISTA, 4th International Conference on Social and Organizational Informatics and Cybernetics: SOIC, 6th International Conference on Politics and Information Systems, Technologies and Applications: PISTA

Bibliographical note

Paper presented at the 2nd International Multi-Conference on Society, Cybernetics and Informatics, Jun 29-Jul 02, 2008, Orlando, Florida.
ISBN of the source publication: 9781934272480

Keywords

  • Mondex
  • Octopus
  • consensus
  • digital cash
  • electronic currency
  • electronic payment systems
  • smart cards

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