Too many payment choices = too confusing

An abundance of choice may not be a good thing, and this is true in the e-payment scene in Singapore.

E-payment in Singapore has been criticised for being confusing, with many options: Apple Pay, Android Pay, Dash, DBS PayLah, ez-link, Nets, CashCard, Liquid Pay and Samsung Pay, in addition to store-specific cards and credit and debit cards. Some merchants may accept one option and not another.

Dr Teo Hock Hai, head of Information Systems at the School of Computing at the National University of Singapore, says that recent developments in e-payments - the launch of mobile wallets like Apple Pay and Android Pay - are layered on the existing credit-card infrastructure.

Merchants still need to pay the 3 per cent transaction fee for accepting Visa and MasterCard payments via Apple Pay or Android Pay.

"Buyers and sellers have nothing to gain from engaging in mobile payments," says Dr Teo.

He notes that consumers tend to resist change once they are used to a certain technology. For instance, people who are used to using their plastic credit cards may not want to try e-wallets like Apple Pay or Samsung Pay.

This multiplicity of choice - although none quite as universally accepted as cash - prompted Minister-in-charge of the Smart Nation Initiative Vivian Balakrishnan to say last week that Singapore is "a victim of its own success".

"It already has a fairly good system that works," he added.

Even so, the Singapore Government is taking another crack at the e-payment sector, with Dr Balakrishnan warning that Singapore would fall behind China and India if it did not accelerate its pace of innovation.

For instance, China's online payment solution Alipay is as universal as the use of cash there.

A slew of measures was introduced in Parliament this month to streamline and simplify the various options for e-payment.

A Central Addressing Scheme, backed by the Association of Banks in Singapore, is slated for launch by the middle of this year to allow fund transfers to one's mobile number.

The scheme will map mobile numbers to bank account numbers for funds to be credited. Users need to register for this with their banks. This saves senders the hassle of asking for and entering a recipient's account number - a bugbear of e-payments now.

The new function will be integrated into banks' existing apps, such as DBS PayLah, UOB Mighty, OCBC Pay Anyone, Maybank Mobile Money and Standard Chartered's SC Mobile.

It is believed that the service will bring down merchants' cost of going digital, allowing even hawkers and owners of small shops to go cashless.

Part of a $90 million fund to modernise hawker centres has also been set aside to install cashless payment systems to open up e-payments there.

Separately, Nets - a consortium of local banks - is upgrading its point-of-sale terminals to accept payment from all banks and payment networks, and through cards or mobile wallets. This upgrade is itself a challenge, as merchants have to be convinced to pay for a new terminal.

Mr Lin Yih, director of Singapore-based smart-card systems developer Digital Applied Research and Technology, says the fragmentation started with two of the most widely used cards, ez-link and Nets CashCards.

For instance, ez-link cards do not work at some carpark gantries although they are accepted in public transport payment. Motorists still need their CashCards.

"They are still not universally accepted after all these years," he says. "The solution to this fragmentation problem is not yet another piece of technology."

Irene Tham

A version of this article appeared in the print edition of The Sunday Times on March 26, 2017, with the headline 'Too many payment choices = too confusing'. Subscribe