Booming adoption of digital payments in Singapore
By Taisha Grace Antony | November 9 2020, 11:50 AM SGT
Singapore has long maintained its position at the forefront of digital payments. The city-state became an early adopter of e-payments in the 1980s, with the launch of automated bill payment services such as the General Interbank Recurring Order (GIRO). Innovations in transit, parking and toll payments like EZLink followed subsequently. Early digital payment solutions like VISA and Mastercard also laid the foundation for a dense payments network in the country. Today, Singapore uses a number of mobile-based payment platforms, such as Dash, GrabPay and PayNow, which started appearing since 2014. The COVID-19 pandemic has further accelerated Singapore’s push to digital payments, with a rise in card payments and decline in cash usage.
The Government of Singapore is actively pushing cashless transactions, aiming to make the country cheque-free by 2025. In support of this, a single QR code that is compatible with multiple e-payment solutions was rolled out in 2018. The first of its kind globally, the Singapore Quick Response Code (SGQR) is an “infrastructure-light technology” that helps to simplify QR e-payments in Singapore for both consumers and merchants. Supported by MAS, the Association of Banks in Singapore (ABS) has launched a sustained campaign to promote the use of PayNow, PayNow Corporate, and SGQR, amidst COVID-19.
Recently, the SG Digital Office (SDO) has been set up to drive the government’s initiatives to accelerate digital adoption in the community, as Singapore embarks on a phased recovery from the pandemic. This office has been tasked to lead programs such as Seniors Go Digital and Hawkers Go Digital, which aim to educate and encourage all seniors as well as stallholders in hawker centres to adopt e-payment solutions. A similar initiative has also been launched to support heartland merchants to digitalize their businesses.
These digital payments initiatives are supported by an enabling policy environment in Singapore. For instance, MAS announced in June 2019 that it will issue up to two digital full bank (DFB) licences and three digital wholesale bank (DWB) licences. The digital bank licences will allow entities, including non-bank players, to conduct digital banking businesses in Singapore. So far, MAS has shortlisted 14 out of 21 applicants for the next stage of assessment. Additionally, MAS’ FinTech Regulatory Sandbox Guidelines (2016) enables financial institutions and fintech players to experiment with innovative financial products or services in a live environment but within well-defined boundaries. The country’s digital payments credentials have been further enhanced by the MAS successfully completing Phase V of the Central Bank Digital Currency project (CBDC), Project Ubin.
The Payment Services Act (PS Act), passed in January 2019, streamlines the regulation of payment services within a single activity-based legislation. The Act empowers MAS to regulate payment services for risks and concerns related to money-laundering and terrorism financing (ML/TF); loss of funds owed to consumers or merchants due to insolvency; fragmentation and limitations to interoperability; and technology and cyber risks. In 2019, the Monetary Authority of Singapore (MAS) launched a consultation on certain amendments to the PS Act. The Payment Services (Amendment) Bill was moved for First Reading in Parliament on November 2, and thereafter on November 4, MAS shared its responses to the consultation. The Act requires a person that carries on a business of providing any payment service in Singapore, including a digital payment token (DPT) service, to be licensed. Furthermore, MAS came out with a consultation paper on a New Omnibus Act for the Financial Sector in late July 2020, which will consolidate similar provisions for various classes of financial institutions in the MAS Act into a single legislation.
As part of efforts to digitally upskill the workforce, MAS, in partnership with the National Research Foundation (NRF) and the National University of Singapore (NUS), is setting up the Asian Institute of Digital Finance (AIDF), that will develop deep capabilities to support the needs of digital financial services in Asia. Similarly, the Global FinTech Institute (GFI) announced in August 2020 that it has signed a Memorandum of Understanding (MoU) with the Singapore University of Social Science (SUSS) and the Shanghai Institute of the International Finance Center (SIIFC) of Shanghai University of Finance and Economics (SUFE), to grow fintech professionals in Singapore and China.
Singapore has also seen several private sector initiatives to enhance the efficiency and security of digital finance. Powered by SWIFT Global Payments Innovation, DBS Bank has launched real-time online tracking of cross-border payments and collections for its global corporate clients. To accelerate digital adoption during COVID-19, OCBC has enabled its 1.8 million digital customers in Singapore to access mobile or internet banking services by logging in using Singapore’s National Digital Identity platform called SingPass. Singapore tech firm Razer Inc has diversified its financial solutions for its demographic of youths and millennials, from virtual currency Razer Gold, and then Razer Fintech, an offline-to-online Southeast Asian digital payment network, to Razer Card, a prepaid card co-created with Visa.