Abstract
Octopus cards are an electronic payment system based on a wireless RFID technology developed in Hong Kong. Users simply hold their contactless smartcards over an electronic reader, and the payment is deducted from the card automatically. If users link their cards to their credit card to upload money, there is no cash transaction involved. Launched in 1997, Octopus cards are the world's most widely accepted contactless RFID electronic payment system. The system generates value for customers, service providers, and societies. This article makes a theoretical and applied contribution to our understanding of strategic information systems. It adopts and modifies Porter's value chain and develops value-chain flexibility as a theoretical framework to analyze the Octopus card system. The fast and dramatic changes in customer needs, business competition, and technological innovation are creating an urgent need for flexibility throughout the whole value chain. By looking at order fulfillment as a process, the shop outlet—either online or offline—is only part of the entire flow from customer enquiry to customer receipt. It is clear that no single idea could significantly reduce customer lead time. Only a total effort from organizations to increase flexibility and eliminate bottlenecks can make the kind of difference needed to compete ( Day, 1994 ; Blackburn, 1991 ; Yusuf, Sarhadi, & Gunasekran, 1999). Therefore, value chain flexibility must be broadly defined, and it should be applied in the service industry. In other words, organizations should be able to deal with the uncertainty along the value chain to meet customer demands. This framework analyzes how the Octopus card system creates value and, in doing so, identifies key implications for customers, service providers, and society
Highlights
Octopus cards are a part of an electronic payment system that uses a contactless smartcard with RFID technology
Electronic payment methods can be classified by the size of the amount to be paid
The reconfiguration of the value chain of the Octopus card system consists of four parts: scanning, networking, transaction, and acting stages
Summary
Octopus cards are a part of an electronic payment system that uses a contactless smartcard with RFID technology. In 2010, an average of 11 million passenger journeys were made throughout Hong Kong on a wide variety of modes of public transport everyday (Octopus, 2010). To handle this consistently heavy traffic, the MTR Corporation Limited (MTR) has been operating a fully automatic fare collection system since 1979. The Octopus smartcard system was officially launched in 1997, allowing users to use a single card for travel across different modes of transportation. In 2009, Octopus developed the Dubai smartcard payment system for various modes of public transportation (Octopus, 2010). It describes the value created for core players at each stage
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