Hong Kong retailers face fraud & licensing hurdles

System integration, fraud and licensing are the main obstacles facing Hong Kong retailers expanding overseas, according to Adyen. Its latest Hong Kong merchant survey found that 40% of enterprise retailers plan to enter new markets.

Those businesses are setting aside an average of HK$1.65 million for expansion, with EMEA and APAC the main destinations. The findings suggest strong appetite for cross-border growth among larger retailers, while also highlighting the operational and regulatory challenges they face beyond their home market.

System integration emerged as a recurring issue. Expanding into new countries often requires merchants to set up different vendors, sign separate contracts and adapt to local payment methods, increasing cost and complexity as they scale.

All merchants surveyed reported some obstacle to broader use of artificial intelligence. About 35% cited integrating AI into existing systems as a specific barrier, suggesting many retailers are still dealing with legacy technology and fragmented infrastructure as they pursue overseas growth.

Adyen cited Limitless Technology Group, the eCommerce business behind brands including LVLY, Flower Chimp and CakeRush, as an example. The group consolidated four payment gateways into one through Adyen and standardised payment reporting across six markets, including Hong Kong, Singapore and Australia.

That allowed more than 10 online stores to go live across four markets within one week, Adyen said. The example shows how retailers are trying to reduce the administrative burden of using separate payment providers in each jurisdiction.

Fraud pressure

Fraud was another major concern. Nearly 88% of merchants said they had either been targeted by or fallen victim to payment fraud over the past 12 months, with average losses among affected businesses reaching HK$1 million.

Refund fraud was the most common issue, affecting half of retailers surveyed. Phishing scams, identity fraud and chargeback abuse each hit around two in five merchants, showing that businesses expanding internationally face a broad range of payment risks rather than a single dominant threat.

The challenge grows when merchants operate across several territories, where consumer payment habits and fraud patterns vary sharply. Businesses must assess whether a transaction is legitimate while navigating different local practices, card usage patterns and market-specific attack methods.

Adyen also pointed to GRYPHLINE, the studio behind the Arknights mobile games, as an example of a business using automated fraud tools to manage these pressures. It deployed Adyen's fraud prevention and payment optimisation systems to distinguish between regular users and bot activity, while aiming to reduce failed transactions and involuntary churn.

That approach helped maintain authorisation rates during periods of heavy transaction traffic such as game release days, according to Adyen. For digital businesses in particular, spikes in demand can make the balance between fraud controls and customer acceptance harder to manage.

Compliance burden

Licensing and regulation were the third major obstacle highlighted in the findings. Retailers entering overseas markets must navigate local rules on payments, acquiring, data handling and privacy, often across multiple legal systems at once.

Data privacy and security concerns were cited by 38% of merchants as a main barrier to wider AI adoption. That suggests businesses are grappling not only with technical integration, but also with how to use customer and transaction data lawfully across borders.

Cathay Pacific was cited as one company managing those demands at scale. The airline expanded its long-running relationship with Adyen to include direct acquiring services across Hong Kong, Australia, New Zealand, the United States, Japan and India.

In India, Cathay Pacific recorded a 10% increase in authorisation rates after implementing Adyen's acquiring service, according to the company. The example highlights how payment performance can be shaped by local market rules and by the structure merchants use to process transactions.

The survey covered 324 Hong Kong retail merchants at senior manager level or above, all with annual turnover of at least HK$150 million. It indicates that while international expansion remains high on the agenda for larger Hong Kong retailers, execution depends heavily on how they address underlying payment, fraud and compliance issues.

“International expansion represents a significant opportunity for Hong Kong retailers, but success depends on getting the fundamentals right,” said Kai Tang, Head of Hong Kong at Adyen. “Merchants who partner with the right payments partner that adapts to local market nuances without requiring custom integration for each region will be best positioned to scale efficiently and securely.”