Octopus way of winning

Positive feedback provides increasing return to the network industries.

Economy of scale and economy of scope help Octopus jumped into other consumer markets such as retail and transport related services, which further weaken the competitiveness of Mondex. Positive feedback is especially important on the merchant side of this payment card industry.

Octopus adopted a revolution approach by controlled migration. Two systems are incompatible and cannot take with each other. Merchants may risk losing sales if they don’t take that card brand. So, eventually, strong (Octopus) becomes stronger while weak (Mondex) becomes weaker. As more and more customers own Octopus, more and more other merchants willing to join the Octopus network.

Unlike Octopus who started from the mass transportation and, Mondex started in other consumer markets with just only a few merchants and mini-bus routes joined. Moreover, there is no standardization between Octopus and Mondex. – “strong gets stronger and weak gets weaker; success begets more success, and failure breeds failure”. HSBC used general credit-card style marketing approach to market her Mondex card. As more consumers have a particular card brand and more merchants take that card brand, it becomes harder and harder for other merchants not to take that card brand. With the retirement of common stored value ticket (CSVT), customers are forced to change to use Octopus.