The Straits Times says

Making e-payments a breeze

It was back in 1985 when a national campaign to minimise cash transactions was launched here, with the goal of making cashless payments a way of life. An alphabet soup of names, like Eftpos, Giro and Nets, gained familiarity over the years but cash still remains indispensable for many consumers.

This sticks out, say some investors like the chief of Chinese tech giant YY. When his company set up a base here, he was surprised cashless payments were not more widely available in Singapore. China, which in the 1980s had just opened its doors to foreign direct investments, is now the world leader in the use of consumer financial technology, while the usage of Singaporean consumers is well under the global average.

The Monetary Authority of Singapore had noted last year that cash circulated here was the equivalent of 8.8 per cent of gross domestic product, whereas it was a mere 2 per cent in Sweden. And an average of 12.7 cheques were written per Singaporean in 2014, against practically none in Sweden. The cost, mostly of storage and processing, was $2 billion; and national productivity suffered as well. The bigger prize, however, is the billions at stake in the race to develop common payment infrastructure that is widely tapped across borders, like PayPal.

Individual banks have come up with offerings like PayLah and Pay Anyone but the pool of users might be constrained - for example, OCBC's app, which enables payment via QR code, requires an OCBC account and a supported smartphone. To use the PayNow system, backed by seven banks, those receiving payments will have to link their mobile phone and identity card numbers to their accounts.

Simplicity and the ease of use of smartphone payment apps are vital to develop scale, namely a large customer and merchant network. That would induce more people to adopt digital means of both sending money to individuals (via low-cost online transfers), and of making payments securely for real-life everyday transactions as well as retail e-commerce.

Importantly, fintech players ought to collaborate more so that users are not made to juggle different systems. Winning mobile solutions are likely to have universal features and inter-operable standards, and satisfy regulators' concerns about consumer protection.

Regional markets show "varied levels of readiness to embrace digital payments", as analysts have noted. In China, for example, e-wallets are used daily by 40 per cent of Chinese consumers (a market dominated by Alipay and WeChat Pay). But elsewhere, like in Singapore and India, only a fraction use e-wallet platforms. Similarly, payment service providers who require credit or debit cards find their services are less popular in the region where many remain unbanked.

A version of this article appeared in the print edition of The Straits Times on July 27, 2017, with the headline 'Making e-payments a breeze'. Print Edition | Subscribe