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A Cashless Society: How Far Has Singapore Come?

The pandemic has made consumers and businesses to adopt e-payments more than usual. Find out from Mr Ricky Lim, Group CEO & MD at NETS, explains how COVID-19 has impacted consumer behaviours and where does Singapore stand today in becoming a cashless society.
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14 Jul 2020
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Written by Daniel Tay

While Singapore’s stay-at-home orders are being eased down and businesses are slowly reopening, the COVID-19 pandemic is likely to leave an indelible mark on the economy and day-to-day interactions.

For instance, the spread of the coronavirus has led to a surge in online shopping. Alibaba-owned Lazada says that their online grocery sales in Singapore quadrupled since the Singapore government introduced Circuit Breaker measures in April. Not surprisingly, this uptick in online retail also hastened the adoption of cashless payment options.

The Straits Times reports that DBS Bank not only found unprecedented growth in the number of e-payment transactions, they also saw cash deposits and withdrawals fall by 11% from January to March compared to the same period last year. More people are also nixing cash when paying over the counter at supermarkets and eateries.

Meanwhile, digital banking has also made its way into the world of migrant workers. POSB Singapore recently opened around 41,000 online bank accounts for foreign workers to receive their salaries or remit money home electronically without resorting to cash.

A cashless future that’s closer than ever

In his keynote at the recently concluded LIT DISCOvery 2020 by Young NTUC (Youth Wing of the National Trades Union Congress), Ricky Lim, NETS Group CEO and MD, NETS Solutions, explains how COVID-19 had made consumers and retail merchants more conscious about safer payment methods that minimise the handling of cash, exchanging of payment cards, and signing for payments.

“The challenge in going digital has always been in changing consumer and business behaviors that have thus far been ingrained in using cash and other high-touch payment options,” he says.

In the past, cash has been viewed largely as a security risk due to being prone to theft and forgery. This is one of the driving forces behind Singapore’s push to be a cashless society by 2025.

But the spread of the coronavirus has added another layer of concern—hygiene. Lim says that because of COVID-19, customers have come to look for no-touch or low-touch payments, preferably on digital platforms, for safety.

Singapore’s history of cashless payments

Singapore’s push towards being cashless is decades in the making.

In 1985, the government launched the National Campaign to Minimise Cash Transactions in an effort to encourage Singaporeans to pay for their transactions electronically. The campaign was part of a greater initiative to increase productivity in the country and save money by making electronic transactions the norm by 1987. It was predicted that by reducing the volume of cash payments, the government would save up to S$24.5 million in labour costs alone.

The three-month campaign, which ran from March to May 1985, had three goals:

1.    To encourage Singaporeans to receive their salaries via direct credit to their bank accounts
2.    To encourage people to pay their bills electronically through the General Interbank Recurring Order (GIRO)
3.    To promote payments using Electronic Funds Transfer at Point-Of-Sale (EFTPOS)

That same year, NETS was formed as the electronic payment service provider tasked to spearhead the nationwide implementation of EFTPOS. NETS was established as a consortium of five banks: DBS Bank, OCBC, OUB, UOB, and POSB.

“When you look at the creation of NETS 30 years ago, we were created with the tremendous foresight to drive a cashless Singapore. For 30 years, we have taken that as our mandate—to push cashless payments,” Lim says.

In the decades that followed, the campaign would be succeeded by other efforts to encourage the adoption of new banking and payment options.

In July 2017, the Association of Banks in Singapore (ABS) launched PayNow, a peer-to-peer fund transfer service that lets users transfer funds from one bank account to another. The service, which now processes over S$1 billion in monthly transactions, uses FAST (Fast And Secure Transfers) and requires users to simply enter a mobile number or Singapore NRIC or FIN to transfer funds.

Last year, NETS led the deployment of an e-payment solution for food hawkers—the majority of whom still depend on cash. The system unifies e-payments from 23 platforms, including GrabPay, EZ-Link, NETS Flashpay, and Singtel Dash among others. It allows diners to pay for their food at a single food outlet payment terminal.

More than 500 food stalls have signed up for the platform. Lim hopes the other 12,000 hawkers across the country will come onboard, too.

How COVID-19 is putting e-payments into overdrive

As Lim puts it, the scale of the COVID-19 crisis is unprecedented.

“I don’t think we have seen merchants, governments, the entire value chain—in fact the entire global supply chain—this affected,” he says.

But if there’s a silver lining to the coronavirus crisis, it’s that it’s also accelerating the migration to digital technologies—e-payments included. A McKinsey report found that COVID-19 had the effect of cramming five years’ worth of consumer and business digital adoption into a period of about eight weeks.

“In the last eight to 12 weeks, I think more people have started to realise that digital payments—digitalisation, digital transformation—have to happen. In the context of COVID-19, it has to happen because of safety reasons,” Lim explains.

And when consumers adopt new technology, there’s usually no turning back.

“When digital conversion happens, the user almost never returns to their old ways,” Lim says. “This is the right time to reap the benefits of digital transformation across the entire Singapore economy.”

The journey to being cashless is far from over

Lim adds that the opportunity to go cashless in Singapore is “very real now” and could be just a few years away due to changing consumer behaviors.

“With COVID-19, the realization is that this (digital payments) is something we need to embrace,” Lim says. “In the next few years, we’ll probably see full digital payments in most places.”

In the meantime, much still has to be done to help users make this transition. While Singapore is one of the most tech-forward countries in Asia, some segments of the population, particularly seniors, are less familiar with technology and don’t even have mobile phones.

“As we go digital and move forward, a big part of our consideration is that we don’t leave anyone behind,” Lim says.

In the last two to three years, NETS has been working closely with different government agencies to push digital payments in places like hawker centres. They’ve also embarked on aggressive education programs designed to help Singapore residents learn how to use mobile phones and banking apps.

“I think this effort will intensify as we push forward with digital payments over the next 12 months,” Lim shares. “As we push forward with transformation, we must never create a digital divide.”

LIT DISCOvery 2020 is a virtual symposium organised by Young NTUC. It was attended by over 3,000 participants and featured several career profiling and exploration activities to help youths and young working adults in their career navigation.