Even before the pandemic, there were reasons to be optimistic about Singapore's bid to grow digital payment use.

In Asean, Singapore residents have the highest awareness of contactless payments, a Visa survey found last year. This is no surprise, given our connected lifestyles, high levels of digital literacy and financial infrastructure.

But the survey also showed that Singaporeans are among the least interested in making contactless payments, compared with residents in other Asean countries.

The biggest factor holding us back is simple, yet often overlooked: old habits. Singaporeans have long been used to fishing out notes and coins to pay for chicken rice or groceries.

Before Covid-19, the use of cash had been falling, but only at a slow pace. Singaporeans withdrew $61 billion in cash from ATMs in 2019, just 6 per cent less than in 2014.

Digital payment use has risen during the Covid-19 crisis. The value of PayNow transactions by UOB customers, for example, grew 220 per cent in the first 10 months of last year, while the volume of PayNow transactions expanded 127 per cent in the same period, compared with pre-Covid-19 levels.

QR payment transactions jumped 272 per cent, compared with the same period last year.

By contrast, physical cash deposits and withdrawals at UOB branches or ATMs fell by more than 30 per cent year on year from March to November last year.

We cannot assume the trend will go far enough. We must act to consolidate the gains, as businesses and individuals are now much more open to change than before.

BUILDING ON PAST WORK

The Government has taken major steps in recent years to support digital payments.

In 2017, it built PayNow to enable individuals to transfer funds between bank accounts with just the recipient's mobile or identity card number. PayNow Corporate, which enables firms to receive such payments, began a year later.

The Singapore Quick Response Code was then rolled out, enabling shops to display just one QR code for all payment providers, thus reducing confusion.

Some customers will always prefer to pay in cash. We can accommodate this by not phasing out a cash option where feasible while stepping up efforts to convert more individuals through public education.

Using digital payments means not having to count notes and coins or do the maths on the change. It makes tracking purchases easier and more transparent.

At a time when concerns about health are paramount, digital payments also remove the need for contact with cash that has passed through many hands.

Businesses doing away with paper-based payments means cost savings, better efficiency and an enhanced customer experience.

Digital payments also come with the benefit of security. Financial institutions are guided by the Monetary Authority of Singapore on safeguarding users from losses that may arise from unauthorised or erroneous transactions.

For example, UOB's mobile banking app, UOB Mighty, uses a digital service that analyses each customer's transaction patterns and notifies users about duplicate charges, refunds or unusual transactions. This enables customers to easily track any unauthorised transactions and report them to the bank.

But even with these benefits, behavioural change has been a stumbling block on Singapore's road to going cashless.

WHAT COVID-19 MEANS FOR PAYMENTS

Individuals who had not previously joined digital payment channels are now opting in. The number of UOB customers using PayNow for payments for the first time expanded 64 per cent year on year in the first three quarters of last year.

These changes mean the measures we take now to encourage digital payments are likely to be more effective than before. Now is the time to examine ideas that have worked elsewhere.

One observation in places that have made progress is the importance of "muscle memory" in the payment space. Digital payment is convenient, but the hard part is getting people started on the habit.

When users are incentivised to begin using digital payments in one setting, muscle memory drives them to use such payments in other settings too.

Google Pay noted that among its customers in Britain who began tapping their phones to pay for public transport an average of just twice a day, it saw an increase in the use of the same payment mode for other purchases in restaurants, shopping malls and elsewhere.

Given this insight, the authorities and industry players could collectively incentivise consumers to adopt digital payments by working with merchants that are most likely to build this muscle memory, as that promises the largest spillover to other sectors.

Merchants that individuals interact with daily and those patronised by the widest cross-section of the population should be the first to be targeted. They would include supermarkets, hawker centres, foodcourts, taxis and the public transport system.

Projects to promote cashless payments in specific sectors are, in fact, under way. In 2019, the Land Transport Authority worked with UOB and other partners to launch SimplyGo, a contactless option for commuters to pay for bus or MRT fares using a credit or debit card.

Replicating these efforts in more sectors will no doubt drive overall digital payment adoption rates among consumers.

Other ways of nudging people towards digital payment include offering rewards and embedding payment in the purchasing journey with minimum friction.

This may require banks, merchants and the government to work together.

When apps by different companies speak to one another better, customers are more likely to pay digitally through them. One example is UOB's partnership with SP Group that enables customers to offset their utility bills by using the reward points they earn on their UOB cards with just a tap on SP's app.

Expanding the free Wi-Fi network would also provide a boost. For small firms, free Wi-Fi reduces the cost of linking to the digital payment infrastructure and helps consumers with limited data plans overcome a potential pain point.

The Covid-19 crisis is a game changer in so many areas of our lives and presents a unique moment when digital payments make more sense to more people than they ever have.

We must seize this moment.

• Jacquelyn Tan is head of group personal financial services at UOB.