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Singapore is looking to create a payments system that will allow people to transmit money using only the recipient’s mobile number, email address or social network account.
The city state’s banks and financial regulator, the Monetary Authority of Singapore (MAS), are exploring the system, which, like the UK’s Paym, will not require a recipient’s bank account details for money transfer.
Ravi Menon, managing director at MAS, said in April that such a system was being considered in line with MAS’s desire to boost interoperability within the industry and promote innovation. MAS is also reportedly working towards a unified POS (point-of-sale) terminal that can read all kinds of cards.
Singapore is already one of the top three cashless countries in Southeast Asia. According to MasterCard, 69% of consumer spending in Singapore is via electronic payments – higher than the global average of 66%. A recent report by Euromonitor showed that for every S$100 spent on personal consumption in Singapore, S$58 is processed electronically.
So an all-in-one payments system seems the natural next step for Singapore. “With fintechs leading the charge today and Singapore having one of the highest smartphone penetration rates in the world, offering digital payments as an alternative seems like a natural progression, if not a necessary one,” said Yashesh Kampani, head of financial services, IBM Asean.
Liew Nam Soon, Asean managing partner, financial services at EY, said there will be a huge market for an all-in-one-addressing system. “Ease of use, with payments requiring only a limited set of customer information, such as their mobile number, email address or social security number, as well as interoperability will encourage even more transactions,” he said. “Already, this payment proposition is offered in markets like Indonesia and India, where there is a large unbanked population.”
Anthony Koh, founder and group CEO at MC Payment, said a unified POS system and all-in-one P2P payments platform would benefit both merchants and consumers. “Merchants will save costs and space as they will not need multiple POS systems on their retail counters,” he said. “At the same time, consumers will be able to send and receive money securely.”
Read more about Asean mobile payments
- Singapore is the first nation in the Asean region to get the Apple and Samsung mobile payment services.
- The Philippines tax office is enabling people to access more services via their mobile phones.
- Recent regulations in Myanmar widen the financial services market to include non-banking institutions.
Rajiv Madane, director, product and strategy at Fiserv, said the proliferation of mobile banking and smartphones has consumers looking for expanded mobile options. “They want it to be fast, intuitive and they want it now,” he said. “These consumer expectations make a service like Paym very practical, perhaps even necessary, in Singapore.”
However, implementing an all-in-one addressing system is a challenge for Singapore’s financial industry, according to IBM’s Kampani. “The key challenge will be how we can make it (an all-in-one addressing system) cost-effective for banks to offer digital payments for low-value transactions, as evidenced in Kenya, where with 2% fees and fixed costs, only transactions larger than $8 were profitable,” he said.
Another challenge is interoperability. “For an all-in-one addressing system to be truly effective, we need greater interoperability of the technology platform, and also greater co-operation and collaboration between financial institutions and payment service providers,” said MC Payment’s Koh.
“Using Paym as an example, having the platform led by an independent party made up of participating payment service providers and institutions – who are also offering the service to their own customers – can help make it a success.”
Igor Pesin, investment director of a Singapore-based fintech venture capital firm, Life.SREDA VC, said that to succeed in Singapore, the platform needed to be more than just a way to reduce cash in society – it should be used to develop value-add services and support the broader aspirations of ‘smart nation’.