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23 Jan 2019  (595 Views) 
Monetary Auth of Singapore

Cost of making a payment

Someone said - I don't need e-wallet because I can pay using Pay Now.

Pay Now uses FAST to transfer money from one account to another. I estimate that the cost of the transfer is $0.50.

I attended a presentation by DBS Bank and asked the presenter. He said that the cost is $0.50 (or thereabouts). It matches my estimate.

Right now, the banks provide Pay Now free, because they want to promote its use. They absorb its cost. But this is only for the initial period. Later, they will ask the customer to pay a transaction fee.

They may continue to subsidise the transaction fee for some time. But they will have to levy the full cost and make a profit in the future.

The cost of e-wallet payment is probably $0.02. This is the experience in China. It is much lower than Pay Now.

We cannot use Pay Now for small payments. The high transaction cost will make it not viable. If you pay $4 for a meal and the cost of payment is $0.50, it will be $4.50. It is not viable.

If you pay with e-wallet and the cost is $0.02 it is acceptable.

Many people make the mistake to think that paying by cash is free. It is not. If you look at the time spend by the cashier and look at the wages of the cashier, it could amount to maybe $0.20, maybe more.

It will be helpful for the MAS to make the cost transparent to the public and the business community. It will encourage the move towards e-wallet payment.

Tan Kin Lian

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