Singapore: Cash holds its own against e-payments push, GlobalData

Despite a well-developed electronic payment infrastructure, cash remains hugely relevant in Singapore with 58.7% of transaction volume made at PoS terminals in 2017, according to GlobalData. In addition, more than 75% of transactions made at hawkers and wet markets are carried out in cash, due to the high cost associated with PoS terminals.  

Acceleration of electronic payments has been one of the key objectives of the government’s Smart Nation Vision and, in this regard, the country has invested substantially in building long-term infrastructure for cashless payments. Overall, the PoS terminal penetration (number of PoS terminals per thousand inhabitants) stands at 35, compared to its Asian peers: Australia (39), Hong Kong (22), Japan (18), China (21), Indonesia (4) and India (2). In Singapore, card-based payments accounted for 32.8% of total payment transaction volume in 2017, increasing from 24% in 2013. 

The country has a very high concentration of SMEs. According to the Department of Statistics, Singapore, there were 220,100 business enterprises in the country in 2017, with 99% of them being SMEs. To encourage adoption of electronic payments among SMEs in particular, the government along with other payment participants is increasingly considering QR-based payments as a viable alternative for cash. 

Kartik Challa, Payments Analyst at GlobalData, comments: “The economic rationale for QR codes is stemmed from the difficulty banks had in persuading smaller merchants to begin accepting payment cards. The QR-code based payment acceptance eliminates the need for a significant expenditure, as merchants can now either display a printed QR code on their stall or download the merchant app on their mobile phones to accept electronic payments.” 

In November 2017, the Singapore Payments Council announced the development of a common standard for Singapore Quick Response Code (SG QR) payments, designed to work across all schemes, e-wallets and banks. Unlike the existing NETS QR system, which focuses on domestic market, the new system will accept electronic payments through both domestic and international payments. The SG QR, developed by an industry taskforce co-led by the Monetary Authority of Singapore (MAS) and Infocomm Media Development Authority, will be deployed throughout 2018. Furthermore, as part of the process, the existing NETS QR will also be integrated into the new system and will be replaced with SG QR at all merchant locations. 

Singapore's banks have also agreed to update their mobile payment apps/wallets to support SG QR. To expand the scope for SG QR, the Association of Banks in Singapore agreed to bring in banking P2P service PayNow under the purview of SG QR. All seven participating banks of PayNow service, Citibank Singapore, DBS Bank, HSBC, Maybank, OCBC Bank, Standard Chartered Bank, and United Overseas Bank – enable their customers to transfer funds via SG QR. 

Challa concludes: “The SG QR system is an important milestone, and to win over merchants, payment solution providers need to support the large number of e-wallets, offer quick payment settlement process and pricing benefits. Similarly, incentivising consumers is a key factor to pique consumers’ interest in the new payment system. With the SG QR making a good headway, cash payments in Singapore are likely to soon become passé. Once again it is at the forefront of innovation in payments, and other markets in Asia and globally are likely to follow the suit.”  

Sign up for our free retail technology newsletter here.