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This little card is why people in Hong Kong don't carry cash

By Katie Pisa and Kate Fleming, for CNN
July 9, 2014 -- Updated 1647 GMT (0047 HKT)
STORY HIGHLIGHTS
  • Hong Kong residents have a fairly cash-free life, especially on public transport
  • The Octopus card, already 17 years old, is now used for several types of commerce
  • Octopus sees a cashless society as a reality, especially in the Asia-Pacific region

Future Finance is a new series showcasing future trends related to the global financial system. The show complements CNN's business coverage by examining everything from a cashless society to high-speed trading that employs the power of laser beams. The series provides global insight into what's on the horizon for consumers and businesses.

(CNN) -- Everyone knows Hong Kong as the buzzy island city home to over seven million people perpetually on the move.

But it may be a surprise to learn that many of the residents in this bustling city don't spend much time foraging in their pockets for change, especially on public transport.

Instead, they whip out their Octopus, a contactless smart card with a chip that communicates with a fare processor in less than a second. It has been in use in Hong Kong since 1997.

According to the company, around 95 percent of people in Hong Kong between the ages of 16-65 have an Octopus card, and their transactions add up to about 18 million dollars every day.

But what's new about Octopus is that recent advances in technology mean that it's being used with phones too. "Now with the advance of smart card technology, we've been able to embed the Octopus mobile SIM inside a smartphone," explained Octopus CEO Kevin Goldmintz, in an interview with CNN's Kristie Lu Stout.

Trains, buses, trams and ferries are all popular places to get around with Octopus, whether it's on a card, a phone or a watch.

Since the Octopus card was released nearly two decades ago, its use has branched off into much more than just transport.

I buy my lunch with my Octopus. I pay for drinks on Octopus. I buy coffee with my Octopus
Octopus CEO Kevin Goldmintz

Forgot your wallet, purse or cash? Not to worry. The Octopus can buy your coffee, a movie ticket, clothes, groceries and even allow you to shop online.

Another new venture is that Octopus has recently partnered with Taobao, China's e-commerce answer to eBay or Amazon.

Though purchases have to remain relatively small with a current ceiling of $130 on each card, Octopus says it allows the customer to easily interact for a purchase.

Shoppers simply need to make a purchase on Taobao by putting their phone with the Octopus mobile application up to the screen and tapping to make that transaction happen.

Octopus has broadened its reach into mainland China with a dual card in Guangdong province and another in Shenzhen. "We're able to put a Hong Kong dollar purse inside the card, as an e-wallet," said Goldmintz.

Octopus says its vision for the next ten years includes tackling the physical/digital convergence and growing its e-commerce strategy. "And I think the other side of it will also to be exporting the knowledge that we've accumulated over 17 years of doing contactless smart card, and deploying that knowledge in other cities around the world," Goldmintz told Stout.

As for the future, Octopus is optimistic that a cashless society will spread to other areas, particularly in its own patch of the Asia-Pacific area.

"You know I buy my lunch with my Octopus. I pay for drinks on Octopus. I buy coffee with my Octopus," said Goldmintz.

"So I think there will be day when both Hong Kong and other cities around Asia-Pacific particularly will be looking towards a cashless society," he said. "I think we're going to make huge in-roads in the next five to ten years in this."

The best way to experience Hong Kong? Climb aboard one of its iconic trams

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