The Octopus card is a rechargeable contactless stored value smart card used for electronic payment in on-line or off-line systems in Hong Kong. Originally launched in September 1997 as a fare collection system for the city’s mass transit systems, the Octopus card system has grown into a widely used electronic cash system used not only for virtually all public transport in Hong Kong, but also for making payment at convenience stores, supermarkets, fast-food restaurants, on-street parking meters, car parks and many other point-of-sale applications (eg. service stations and vending machines). In addition the system is used for control access to offices, schools and apartments. Using a card involves simply holding the card in close proximity above, or on, an Octopus reader, and cards can be recharged with cash at add-value machines or over the counter in shops (notably 7-Eleven), or directly through credit cards and bank accounts.
Octopus has become one of the world’s most successful electronic cash systems, with over 12 million Octopus cards in circulation (nearly twice that of Hong Kong’s population) and over eight million transactions per day, with nearly 300 service vendors (as of January 2005). The operator of the Octopus system, Octopus Cards Limited, a joint venture between MTR Corporation and other transport companies in Hong Kong, has won a number of contracts to extend Octopus-style systems to the Netherlands and Changsha.
Name and Logo
The Chinese name for the Octopus card literally means “eight places pass.” Eight is a significant number in Chinese which is often used to indicate “many.” For instance, the Chinese phrase ???? (”four sides eight directions”) is a common expression meaning “in all directions.” Eight is also considered a lucky number in Chinese culture. The English name “Octopus card” is derived from the use of the number eight since an octopus has eight tentacles. The name is also particularly appropriate since “octopus” has the connotation of being able to grab many things at the same time and this ability is conferred upon its cardholders who can use it in many different transactions.
The logo used on the card also features a Möbius strip twisted into the shape of the number 8 in order to indicate the card’s “infinite” possiblities. The mathematical symbol for infinity ? looks like a sideways 8 and is commonly thought to be derived from a Möbius strip (although the real origin of the symbol is unclear).
The Chinese name was selected by the head of the MTR Corporation, the parent company of Octopus Cards Limited, in a naming competition held in 1996.
Obtaining and Using an Octopus card
An on-loan Octopus card can be purchased at Mass Transit Railway (MTR) and Kowloon Canton Railway (KCR) stations. No identification is required. If an owner loses a card, only the stored value of the card is lost. This type of Octopus card is anonymous; no personal information, bank account or credit card details are stored on the card.
Making or recording a payment using the card (eg. by passing through a MTR or ferry ticket gate, boarding a bus, alighting from a tram, or purchasing items from various outlets) is done by holding the card against or in close proximity to an Octopus card reader (which usually bears a yellow and orange colour scheme or logo similar to the card itself). After a brief moment (about 0.3 seconds per transaction) the reader will acknowledge payment by emitting the “Octopus Bleep”, and the reader will display the amount deducted and the remaining balance of the card. A higher pitched sound will be emitted if the card is not accepted, i.e. if the stored value is insufficient (below -HK$35), or if the reader was unable to read the card (owing to interference or the card being removed too quickly). Concession users are also acknowledged by a higher pitched beep on all forms of transport barring the MTR, which plays three note in succession. MTR and KCR systems note the entry point of a user when a card is swiped, and will deduct the appropriate amount when the user swipes their card again at the exit point.
Value can be added to the card using “add-value machines” located at all stations in the MTR and KCR networks, or with the help of cashiers at supermarkets, convenience stores and MTR and KCR service centres.
As Octopus cards do not require physical contact with readers, and can be read from up to a few centimetres away through common materials such as cotton or leather; visitors to Hong Kong may find it strange to see people holding their wallets, handbags, backpacks or jackets on or near readers. As with the other products, you may even see people waving their cellphone, watch or even a keychain over the Octopus reader.
The card can be used to pay fares or to make purchases for nearly all Hong Kong transportation systems, and at many stores in the city, most notably, 7-Eleven, McDonald’s, convenience stores, other fast food restaurants and Starbucks coffee shops. A large number of vending machines and self-service kiosks in Hong Kong accept Octopus as payment; these range from beverage vending machines to payphones and photo-booths — they can even be used to purchase travel insurance (for HK$10 per person, from the Bank of East Asia). Ricoh, Minolta and Fuji Xerox offer photocopiers that support payment by Octopus.
An anonymous on-loan Octopus card can store a maximum of HK$1,000, and has a deposit value of HK$50. The maximum negative value on a card is HK$35; this feature is implemented to allow cardholders to use a card with an insufficient value to make one last trip — even if the balance on the card is only at, say, HK$0.10 (the maximum cost of a trip on any of the rail networks except the Airport Express and first class of the KCR East Rail is HK$34.8, for an East Rail trip from East Tsim Sha Tsui in Kowloon to Lo Wu on the border with mainland China at Shenzhen).
History
The MTR network adopted a system of recirculated magnetic plastic cards when it started operations in 1979. These cards were either used as single journey tickets or as stored value tickets. The KCRC adopted the same magnetic cards in 1984, and the stored value version was renamed Common Stored Value Tickets.
In 1989, the Common Stored Value Tickets system was extended to KMB buses providing a feeder service to MTR/KCRC stations and to Citybus, and was also extended to a limited number of non-transport applications, such as payments at photobooths and for fast food vouchers.
MTR eventually decided to adopt more advanced technologies, and in 1993 announced that it would move towards using contactless smartcards. To gain wider acceptance, MTR and KCRC invited three other major franchised transport operators in Hong Kong, namely KMB, Citybus and the Hong Kong and Yaumati Ferry to form a joint venture company in 1994, known as Creative Star Limited (renamed Octopus Cards Limited in January 2002). (The only major public transport operator at the time not to join was China Motor Bus, which pulled out of public transport altogether in 1998, in favour of its property development business, and had all of its bus routes transferred to NWFB).
The Octopus system was launched after three years of trials on September 1, 1997. Initially for use on services offered by the five joint venture partners, it was quickly extended to other transport services. In 2000, the Hong Kong Monetary Authority granted a deposit-taking company license to the operator, removing previous restrictions that prohibited Octopus from generating more than 15% of its turnover from non-transit related functions.
In January 2001, a new shareholders’ agreement was signed and the shares of Hong Kong and Yaumati Ferry in the operator was transferred to NWFB and New World First Ferry. In conjunction with the privatisation of its parent company, MTR Corporation, Octopus Cards Limited was also transformed from its previous non-profit making status to a profit making enterprise.
On June 29, 2003, the Octopus card found another application when the Hong Kong Government started to replace all its 18,000 parking meters with a new Octopus card operated system. The replacement was completed on November 21, 2004. A number of government facilities including public swimming pools and sports facilities also adopted the Octopus system at around the same time.
In November 2003, Octopus Cards Limited secured a HK$200 million (USD 25.64 million) contract to help provide contactless smartcard technology in The Netherlands’ system, combining the fare collection system of all its public transport companies – starting with rail operator Nederlandse Spoorwegen, bus and tramway operator Connexxion, public transport companies of Rotterdam (RET) and Amsterdam (GVB) and the tram system in The Hague (HTM).
Comparison with Other Electronic Cash Systems
Mondex specifically cited the widespread popularity of Octopus as the reason for withdrawing from the Hong Kong market in 2002. This is despite the fact that they launched their cards one year before the Octopus (in 1996), and had the backing of two of Hong Kong’s biggest banks, HSBC and its subsidiary Hang Seng Bank. Academic studies suggest that the biggest cause was the lack of a compelling reason on the commuters’ part to adopt the Mondex system, unlike Octopus, which had the solid backing of public transport companies and hence commuters and other travellers using their service. An additional drawback was that Mondex cards required 5 seconds to process, compared with 0.3 seconds for a “touch and go” Octopus card. 84% of respondents in a University of Auckland survey attributed the success of Octopus to quick service.
Octopus cards are also anonymous. Lack of anonymity is one of the reasons cited for the failure of many cash cards, such as VisaCash, which has the backing of two of Hong Kong’s biggest banks, Bank of China and Standard Chartered Bank.