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The Big Read in short: Making e-payments in Singapore more resilient

The Covid-19 pandemic has accelerated the adoption of electronic payments, with many users choosing not to carry cash around. However, seniors are less inclined to adopt cashless payments while recent service disruptions and rise of scams have also raised concerns among younger users. 

With e-payments taking off here in recent years — amid the Covid-19 pandemic and an ongoing national drive for a less-cash society – a growing majority of consumers are opting to pay for goods and services using their cards or phones.

With e-payments taking off here in recent years — amid the Covid-19 pandemic and an ongoing national drive for a less-cash society – a growing majority of consumers are opting to pay for goods and services using their cards or phones.

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Each week, TODAY’s long-running Big Read series delves into the trends and issues that matter. This week, we look at the rise of electronic payments in Singapore and how it can be improved. This is a shortened version of the full feature, which can be found here.

  • The Covid-19 pandemic has accelerated the adoption of electronic payments, with many users choosing not to carry cash around 
  • Singapore’s adoption rate of cashless payments is now the highest in Southeast Asia
  • However, seniors are less inclined to adopt cashless payments while recent service disruptions and rise of scams have also raised concerns among younger users 
  • To enhance the resilience of e-payment systems, experts suggest having multiple payment options available and educating consumers about e-payment technologies
  • Offline e-payments are also a potential solution, though the technology is still underdeveloped and has its own downsides

SINGAPORE — On most days, Ms Pang Shi Jia leaves her home with only her phone and card holder, which contains two bank cards. 

“I don’t even remember when was the last time I withdrew cash to spend,” said the 26-year-old public servant. 

With most places she frequents accepting contactless payments, Ms Pang does not see the need to carry any notes or coins at all. 

Ms Renny Tan, 23, also pays for her food and other purchases through cashless means, preferring to use her smartwatch, which contains her credit card details, most of the time. 

“I think it’s very convenient because you just tap (the watch on the payment terminal) and go. I don’t like having to take out my wallet, pull out my cash and count, the process is so long,” said the interior designer. 

With electronic payments taking off here in recent years — amid the Covid-19 pandemic and an ongoing national drive for a less-cash society — these users are part of a growing majority who opt for using their cards or phones to pay for goods and services. 

Many users also use cashless platforms to transfer money to other individuals, such as friends or family members. 

Cashless payment types consist of credit and debit cards, as well as electronic wallets, such as Apple Pay and Samsung Pay, which allow users to store their credit card details. 

They also include smartphone payment applications such as DBS PayLah! and GrabPay, which enable users to top up and store money in their “virtual wallet” on the app, as well as PayNow, a service that allows fund transfers instantly. 

WHY IT MATTERS 

Singapore’s adoption rate of cashless payments is the highest in Southeast Asia at 97 per cent, based on payment methods at Singapore retail points-of-sale in 2022, according to a 2023 survey published by German statistics company Statista. 

Digital wallets are expected to overtake credit cards as the most popular online payment method in Singapore by 2026, according to a 2023 Global Payments report by financial technology company FIS. 

This rise was accelerated by the pandemic, which saw people avoiding the use of cash to minimise contact.

Users also told TODAY that it is more convenient and faster to use e-payments compared to cash. 

However, not everyone is enamoured with the “simplicity” of cashless payments. 

The elderly in particular prefer handling cash as electronic means are too complicated for them, with the rise of scams further impeding their adoption among this group. 

Recent service disruptions have also raised questions among younger consumers about the reliability of e-payments and the inconvenience it creates when services are down. 

During the DBS bank day-long disruption in March, users found themselves being unable to pay as they seldom carry cash on hand. 

This begs the question, should Singapore go completely cashless? And in a society where cashless payments are ubiquitous, how can the e-payment ecosystem be more resilient? 

Singapore’s adoption rate of cashless payments is the highest in Southeast Asia at 97 per cent, based on payment methods at Singapore retail points-of-sale in 2022, according to a 2023 survey published by German statistics company Statista.

THE BIG PICTURE 

As of 2022, more than 210,000 merchants operating across various service industries in Singapore, including retail stores in shopping malls and food stalls at hawker centres, offer SGQR as a means of payment acceptance, said Chairman of the Monetary Authority of Singapore Tharman Shanmugaratnam in Parliament last year. 

This accounts for over 90 per cent of merchants in Singapore, he added.

The SGQR which was launched in September 2018, combines multiple payment schemes into a single label. 

Singapore is not the only country which is moving steadily towards cashless payments. 

Several countries such as Sweden and China already have high e-payment adoption rates.

According to Sweden’s central bank Riksbank, the proportion of Swedes using cash fell from 39 to 9 per cent from 2010 to 2020. 

Mr Nima, a Swede who moved to Singapore five years ago and is working in the financial technology industry, noted that Swedes in general, including the seniors, are more open to adopting new technology. 

“The Swedes are okay with taking risks — they jump onto new technologies and new opportunities, seeing the upside instead of the risks,” said the 41-year-old, who declined to give his full name.

In China, many shops and even taxi drivers refuse to accept cash. 

Professor Lawrence Loh, director of the centre for governance and sustainability at NUS Business School, said that vendors in China were offered numerous incentives to adopt WeChat and Alibaba-owned Alipay. 

This resulted in many stores adopting both payment systems and even rejecting cash, leaving people, including seniors, with little choice but to learn how to pay with their phones. 

THE BOTTOMLINE 

Against the backdrop of such disruptions in services, business and technology experts told TODAY that having multiple payment options available is one way to ensure the resilience of the e-payment landscape here. 

Associate Professor Liang Zhen Kai from the School of Computing at the National University of Singapore (NUS) said that he has two bank accounts — one of which he tops up regularly with a smaller amount for spending. 

The other is a bank account that he uses only to save money. 

Dr Douglas Streeter Rolph, a senior lecturer of finance at the Singapore University of Technology and Design, added that having multiple options would also allow for financial inclusion. 

For instance, a store that accepts only Apple Pay may exclude those who could not afford an Apple smartphone. 

Against the backdrop of disruptions in services, business and technology experts told TODAY that having multiple payment options available is one way to ensure the resilience of the e-payment landscape here.
Experts also agreed that Singapore should not go fully cashless as cash still plays an important role here, especially among the elderly. 

It also serves as a “fallback” when e-payment systems are down. 

Ms Lim May-Ann, director of the Fair Tech Institute at technology consultancy firm Access Partnership, said that one of the biggest risks in becoming a cashless society would be to “place our trust in a system with a single point of failure”.

If there were an electricity or internet outage for instance, people would not be able to carry out payments. 

“To be a truly resilient country, there should be alternatives available to us — slower and perhaps more cumbersome, but we have to build these redundancies if we are to build a resilient financial ecosystem,” she said. 

E-wallets which do not require an internet connection could also be another way to increase the resilience of the e-payment infrastructure, where the internet is the basic block of all cashless systems. 

Assoc Prof Liang said that such offline wallets could possibly use Near Field Communication (NFC) technology to transfer funds from one smartphone to another by tapping them together. 

NFC is a technology that allows devices like phones and smartwatches to transmit data wirelessly over short distances using radio waves. 

It is used for e-wallets such as ApplePay as well as credit cards, allowing users to tap their phone or card onto the payment terminal to pay.

If the terminal is connected to a phone line, an internet connection is not required to carry out the payment. 

Although offline wallets could bring benefits such as facilitating payments in the event of an internet outage, Assoc Prof Liang does not foresee them entering the market anytime soon as the technology is still underdeveloped. 

Referring to the need for options, alternatives, and resilience, Ms Lim said: “We can aim for a cashless society, but let’s not miss the forest for the trees.” 

Related topics

e-payment e-wallet banking

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