News analysis

SGQR: One e-payment code to rule them all?

Physical clutter may be replaced by single QR code sticker, but virtual tangle remains

A drinks stall at Tanjong Pagar Plaza Food Centre with a QR payment code displayed.
A drinks stall at Tanjong Pagar Plaza Food Centre with a QR payment code displayed. LIANHE ZAOBAO FILE PHOTO

On Monday (Nov 20), the Monetary Authority of Singapore announced the specifications of a national QR code, a move that marks one of the biggest steps towards finally unifying the country's deeply fragmented e-payment market.

The code, known as SGQR, will free merchants from messy multiple-terminal set-ups or the need to display multiple QR (quick response) codes to accept different payment schemes.

There will be only one QR code to display and it will work with most of, if not all, the e-wallets in use: DBS PayLah!, Singtel Dash, Grab Pay and AliPay.

Senior Minister of State for Communications and Information Janil Puthucheary had said that for merchants, it would be "an infrastructure-light and cheaper alternative to accept different types of e-payments".

Singtel's Dash is the first to embrace SGQR, with its QR code sticker displayed at a handful of merchants here. E-payment stalwart Nets also said it will change its current QR code - rolled out to about 30,000 acceptance points in malls and taxis, and 600 hawker stalls - to one that incorporates the SGQR specification.

While the SGQR concept is an important development, it is important for consumers and merchants to understand that it streamlines only a small part of the current e-payment mess.

The physical tangle of wires and clutter of payment terminals seen at the checkout counters of Harvey Norman, Best Denki and Din Tai Fung may be replaced by a sticker, but the virtual tangle remains.

This virtual entanglement will exist in the form of payment settlement relationships.

For instance, if a merchant partners Singtel Dash, it is paid by Singtel. Similarly, merchants partnering GrabPay are paid by Grab at the end of a business day.

For a merchant to accept all the different e-wallets in use, it must also set up payment accounts with the respective payment providers.

Otherwise, merchants will be singing the same refrain: "Sorry, we do not accept payment by A , B and C, and we take only D."

Creating accounts with several service providers also means more complicated account reconciliation at the end of a business day - which most hawkers are not familiar with and would baulk at.

For instance, service providers itemise and describe bills differently, and the day's account may not be settled at the same time.

A drinks stall at Tanjong Pagar Plaza Food Centre with a QR payment code displayed.
A drinks stall at Tanjong Pagar Plaza Food Centre with a QR payment code displayed. LIANHE ZAOBAO FILE PHOTO

For consumers, SGQR does not guarantee their e-wallet of choice will be accepted by the merchant, even if the code on the displayed sticker is theoretically compatible.

So this much is certain: Displaying the SGQR code alone does not automatically translate to fuss-free settlement, or mean that merchants can accept all e-wallets. Consumers need to first check what payment schemes the SGQR code supports before paying.

It goes without saying that to win over merchants, payment firms need to support the largest number of e-wallets. This is precisely the reason the three-decades-old Nets rallied all the seven major banks here around its QR code. Combined, the seven banks cover 90 per cent of retail transactions here.

Creating the unified cashless system provider, which Prime Minister Lee Hsien Loong called for in August, is a gargantuan task, requiring a smart game plan.

While SGQR is a start, it is only a small piece of the puzzle.

SEE FORUM


Correction note: This story has been edited for clarity.

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A version of this article appeared in the print edition of The Straits Times on November 23, 2017, with the headline SGQR: One e-payment code to rule them all?. Subscribe