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Singapore still no closer to unified payment system: Analysts

Singapore still no closer to unified payment system: Analysts
Nets announced on Tuesday (Sept 12) that it will implement new payment modes — including QR codes for mobile payments, new Nets contactless cards, and an app storing a digital version of Nets ATM cards — across all its 100,000 acceptance points by the middle of next year. Photo: Robin Choo
Published: 4:00 AM, September 13, 2017
Updated: 8:22 AM, September 13, 2017

SINGAPORE — For all the convenience it could bring consumers, Nets’ unveiling of a wide variety of new digital payment modes is unlikely to bring Singapore a step closer to a unified payment system, analysts said yesterday, amid early signs that the landscape will remain fragmented.

Mr Ajay Sunder, vice-president for digital transformation at business consultancy Frost & Sullivan, said Nets is creating more options that — while beneficial from the consumers’ point of view — are not very inter-operable.

For instance, its solutions at present do not include the linking of credit cards, he noted.

Nets announced yesterday that it will implement new payment modes — including QR codes for mobile payments, new Nets contactless cards, and an app storing a digital version of Nets ATM cards — across all its 100,000 acceptance points by the middle of next year.

Mr Japnit Singh, deputy chief executive of Spire Research and Consulting, said: “It is true that Nets would retain control in the short term. However, the true benefits of the unified payments system would be seen when other payment companies are able to join in.”

However, he gave credit to Nets for laying the infrastructure for a unified payments system, that is, the unified point-of-sales terminals.

He noted that a similar evolution had taken place in the telco industry, where infrastructure sharing has now become the norm.

The greater penetration of digital payment offerings, arising from the Nets announcement, especially the QR code payment mode, is also “a step in the right direction for Singapore to become a truly smart city”, he said.

Mr Michael Yeo, research manager at market research company IDC, said: “There may be some initial customer confusion over the introduction of another QR code-based system, but Nets has stressed that it is attempting to make this system open.

“It will accept the QR code payments from the efforts of DBS, OCBC and UOB and will likely adopt further standards that may be introduced later such as perhaps PayNow and GrabPay.

“This is definitely a good move and will lessen some of the complications that consumers will face. Having so many different systems, however, still isn’t that ideal.”

The Nets QR code system will be part of the common QR code that will be developed for Singapore by the end of the year, as announced by the Monetary Authority of Singapore last month.

Merchants said more payment options will help to attract customers, but added they would draw the line at higher transaction fees should Nets choose to impose them.

Mr Alex Teo, who owns joss paper shop Ban Kah Hiang Trading, said that ever since he started offering electronic payment modes this year — including Nets, credit cards and Apple Pay — about 20 per cent of his customers have tapped on these to pay.

“In a way, it attracts more customers to our shop as it is convenient,” he said.

“There are benefits, so I would use such new e-payment methods as long as the transaction fees don’t increase drastically from 0.3 per cent to 3 per cent.”

Nets currently charges merchants 0.3 per cent to 0.8 per cent in transaction fees.

For its QR code payment, Nets is not charging hawkers any transaction fee for the first three years.