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Variety of e-payment options is to allow for competition, innovation: Ong Ye Kung

SINGAPORE — While he acknowledged that Singapore's e-payment landscape is confusing due to the plethora of options, Education Minister Ong Ye Kung said that the Government has "deliberately taken a different approach so as to allow more competition and innovation in the payments space".

Variety of e-payment options is to allow for competition, innovation: Ong Ye Kung

While he acknowledged that Singapore’s e-payment landscape is confusing due to the plethora of options, Education Minister Ong Ye Kung said that the Government has “deliberately taken a different approach so as to allow more competition and innovation in the payments space”.

SINGAPORE — While he acknowledged that Singapore's e-payment landscape is confusing due to the plethora of options, Education Minister Ong Ye Kung said that the Government has "deliberately taken a different approach so as to allow more competition and innovation in the payments space".

Speaking at the Association of Banks' annual dinner on Wednesday (June 20), he acknowledged that having one or two players dominate the market brings "short-term convenience to consumers", but there will be "significant downside risk in the long term" due to a lack of competition in Singapore.

This is especially when the dominant player wields significant market power, and owns all the transaction data and customer information, he pointed out.

Mr Ong, who also sits on the board of the Monetary Authority of Singapore (MAS), added that over time, this can slow down the rate of innovation, and give rise to the risk of unfair pricing for customers.

In Singapore today, consumers have to navigate an "e-payment labyrinth" — holding multiple e-wallets and stored value cards because each can only be used with specific merchants or banks. Businesses, too, often have to display separate QR (Quick Response) codes to accept payments via multiple platforms.

This is unlike the situation in China, where the cashless payments oligopoly is dominated by Ant Financial's Alipay and Tencent's WeChat Pay.

A survey last year by electronic payment provider PayPal showed that cash and credit cards remain the preferred payment modes among Singaporeans, and about two-thirds of the respondents said that more payment options meant more confusion.

Mr Ong acknowledged as much on Wednesday: "Some Singaporeans feel that our e-payment landscape is confusing because there are so many options out there."

The Government's aim, he said, is to allow for a variety of payment options that are "competing yet interoperable and convenient". For this to happen, there is a need to go through this period of proliferation of e-payment options, because it will take time to develop and streamline backend infrastructure, so as to ensure that the services can work and be used together.

For instance, the MAS and the banking industry launched the Fast and Secure Transfers system in 2014, which allows real-time fund transfers between customers of different banks. Now, 20 banks here have adopted the system.

In July last year, Singapore took another step towards the cashless push with the launch of PayNow, a funds transfer service that requires just the recipient's mobile phone number or identity card number.

Mr Ong said: "It took some time to ensure that (the backend systems) are interoperable, (and) all banks can plug into (PayNow) to provide their e-payment services and compete against one another. This will avoid the situation where a single commercial player dominates the market and shuts others out."

Singapore had adopted similar approaches in the power and telecommunications sectors by ensuring that backend infrastructure — the power grid and landline networks — are accessible to all players.

There is good progress made in enhancing interoperability in the e-payments space, but "we are not fully there yet", Mr Ong said.

To make it easier to go cashless, public transport payment systems will be improved so that fare-card readers on buses and trains will act like United Point of Sale terminals which accepts multiple e-payment modes.

Later this year, all service providers will adopt a standardised QR code, which will allow consumers to scan a single QR code, regardless of which e-payment platforms they use.

First announced by Prime Minister Lee Hsien Loong during the National Day Rally last year, this standardised code — dubbed "SG QR" — will also bring convenience to merchants, who will then only need to display one QR code for transactions across various platforms.

PayNow will also be extended to transactions between consumers and businesses.

Mr Ong noted that the take-up rate of e-payment has been "promising" despite the resistance from some users, saying that more than eight in 10 consumers here have adopted e-payments and almost three-fifths of merchants are accepting them.

Cash withdrawals at ATMs have also been shrinking, by more than S$300 million each year, he added.

The adoption of e-payments will not be linear, he said, but will rise when users' level of convenience and confidence crosses a "critical tipping point".

"The aim is not to force a cashless society, but to enable everyone to enjoy the convenience and efficiency of e-payments – simple, swift, safe and seamless."

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