Singapore’s Move Towards A Cashless System
Singapore Prime Minister, Lee Hsien Loong had during the National Day Rally in 2017 touched on the need for the country to eliminate cash as a form of transaction. He said Singapore should follow China and adopt a unified cashless payment system.
Since then, numerous cashless payment platforms, such as NETsPay, GrabPay, LiquidPay, DBS PayLah! and PayNow emerged, allowing consumers to pay using an application on their smartphones. However, the issue is are these methods really efficient and to what extent do they make lives better for small business setup.
For hawkers, like those at the Tao Payoh Wet Market and Food Centre, DBS introduced is DBS Paylah! which was widely used there by consumers. According to one of the traders there, Anton Tan who owns Uggli Muffins, the cashless system is easy to use and very fast. All customers have to do is scan a QR code at the stall using their DBS PayLah! App, and they can then type in the amount owed and send the money to him. He will then receive a payment notification on his mobile. Though Tan has been used to cash transactions all this time, he now acknowledges the benefits from such a payment system.
“Cashless payment systems eliminate the need of looking for change, which often takes times. It also gives me more time to focus on the food if people choose to use the QR code system.” Also, he said compared to credit cards or NETS, mobile payment providers often lower the transaction fee to zero when the merchant has just started using the system. After the first year of so, transaction costs will remain low. “These incentives encourage me to use it more,” added Tan.
On the downside, he said the cashless system is not yet popular and not used as much by consumers. He said many people still choose to pay by cash. “It may be because they have to download an app, or because they are unaware that they can use it. I also do not have much time to encourage them to use QR code to pay.” Suppliers also prefer to be paid in cash and to make their supplier payments, hawkers rely on cash payments from their customers.
For cashless systems to be fully embraced they need to be used for all transactions, not just those from customers. For those who are starting up their business in Singapore, it would be best to immediately opt for this cashless payment rather than be forced to implement it later.
Multiple Singapore cashless systems
The problem with cashless payments in Singapore is consumers may not instinctively gravitate toward mobile payment systems considering there are multiple modes of payment including NETS and credit cards. Digital Business and Risk Assurance leader at PwC Singapore Greg Unsworth told Channel News Asia that consumers do not feel as compelled to make the switch to mobile payments – unlike in emerging markets like Indonesia and Myanmar. However, it is slowly changing in Singapore.
According to country head of personal financial services at United Overseas Bank Singapore Jacquelyn Tan, electronic payments, both digital and mobile, have grown in the past year. She said transactions have grown about 25% from year to year and within that arena, there are contactless payments that can take across different form factors of plastics, wearables and mobile phones. “That has grown about 120% year-on-year, while there was a decrease in over-the-counter cheques and cash payments by about 15%,” she added.
Too many choices?
Considering the multitude of options for such contactless or mobile payment systems, the market has become very fragmented and this has led to consumers’ slow adoption of such payment methods. For example, Grab launched their GrabPay e-wallet at hawker centres on November 2. Grab has launched the service in 25 restaurants as well as in hawker stalls in the Central Business District (CBD) and Bishan area. It says it hopes to on-board 1,000 merchants in Singapore by end of the year.
One problem is different stalls operate mobile payment systems from different providers, and this makes it difficult for consumers as they have to download different apps accordingly. This also lead to more confusion and concerns about security as well. One way of overcoming this is perhaps the introduction of PayNow, which is a collaboration between all the major Singapore based banks. If there is one unified payment system adopted by all merchants, the transition to a cashless future will be more seamless. China is a prime example of this.
China in the lead for cashless payment
Chinese consumers can go on for weeks or even months without needing cash as everything is done with WeChat Pay and AliPay. In China, consumers open the “wallet” on their app and they can display a QR code for vendors, who will then scan the code. The transaction is then completed. Consumers also have the option of scanning the vendor’s QR code and then entering the amount. Even street food stalls accept payment from both of these apps.
With the introduction of just two dominant payment systems, it is easier for the smallest of merchants to adopt. However, with the fragmented market in Singapore, it is difficult for small merchants to adopt all of the available methods. As such, if Singapore Company Incorporation wants to move toward a truly cashless society, there has to be a dominant and unified cashless payment that will make the process seamless for both consumers and merchants.