Monetary Auth of Singapore Promote cashless payment in Singapore
I give my suggestions on promoting cashless payment in Singapore. 

1. Mobile payment

The most common form of cashless payment uses a mobile phone. This is the case in China, where Alipay and Wechat Pay are pervasive. 

In Singapore, many similar platforms have been introduced, such as SGQR, DBS PayLah, GrabPay, Fave, Shopee and Shopback.  

Due to the proliferation of these mobile platforms, each has a small market share. Most customers continue to pay using cash, which they find to be most convenient.

Some merchants provide many platforms (sometimes more than 10) for their customer to pay. It must be quite difficult for the merchant to reconcile their collections at the end of each day. 

The drawbacks of the mobile payments are:

a) It is quite troublesome for the customer to locate the app, scan the QR code, authenticate and make the payment. 

b) Some customers do not carry a mobile phone, e.g. seniors or children.

In my view, the mobile payment cannot be the backbone of cashless payment in Singapore.

2. Payment using NFC card

There is another form of cashless payment that is more convenient than mobile payment. It uses a NFC enabled payment card (also known as a stored value card or cash card). 

The customer top ups the payment card (using Pay Now or bank transfer) and uses the card to make payment to merchants (e.g. hawker stalls and small shops). 

The merchant uses a NFC enabled mobile phone to collect the payment. Some merchants already have this device. Alternatively, the merchant can buy a low cost POS device (costing less than $150) to collect the payment. 

A payment card that is already commonly used in Singapore is the transit card (Ez-Link and Passion). They are actively used for transit, but are not actively used for retail payment. Many merchants do not accept payment from the transit card at this time, due to the high fees. This can be changed.

In my view, the payment card should be promoted as the backbone of cashless payment in Singapore





3. Bank card

Many people are already making payment using a bank card (debit or credit card). Paying with Google, Apple or Samsung is an extension of this form of payment as they are linked to a bank card.

This works well for large merchants who are able to negotiate a low transaction fee to pay to the bank. Their customers find card payment to be convenient.

However, it does not work well for small merchants who have to pay a high transaction fee (2.5% or more) to receive payment from a bank card.

This form of payment is not available to people, e.g. seniors and children, who do not have a bank card.

4. Payment by cash

Payment by cash continues to be the preferred form for small payments to hawkers and small shops. 

The merchants and customer think that cash payment is free. The merchants do not consider the time taken by the shop assistants to count money, give change and to bank in the daily cash collection. 

This time spent is wasteful, especially when many merchants find it difficult to employ retail assistants, due to labour shortage.

The customers are not aware that the high labour cost is reflected in the prices that they have to pay.


In my view, we should move away from cash payment in Singapore.

5. Cash services provided by banks

At present, banks in Singapore allow customers to withdraw cash from ATM free of charge. They also allow customers to bank in their cash collection free of charge.

The banks now incur a cost to provide the cash services (i.e. ATM withdrawal and cash deposits).

In some countries, the banks require the customer to pay a fee, typically S$2 or higher, for ATM withdrawals. 

It is better to allow or encourage the banks in Singapore to levy a fee for cash services to cover their cost. When customers and merchants have to pay this fee, they will move to cashless payment. 

The banks will be able to increase the interest rate payable on bank deposits when they are able to levy a fee for cash services.



6. Conclusion


Here are my suggestions to promote cashless payments in Singapore. 

a) Make it possible for many merchants to accept payment from customers using the transit card (Ez Link and Passion) by lowering the transaction charge payable by merchants.

b) Allow other payment service providers to issue payment cards to compete with the transit card, but they have to use a common platform, i.e. to avoid proliferation. 

c) Allow the bank to impose a fee for cash services, so that merchants and customers will move towards cashless payments. 

Tan Kin Lian
 

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