(Sept 18): Since Prime Minister Lee Hsien Loong addressed the issue of e-payments in his National Day Rally, new solutions have been raining down.
On Aug 29, a payments council established by the Monetary Authority of Singapore agreed to establish an industry taskforce to develop a common quick response (QR) code for payments.
A day later, ride hailing app maker Grab announced that users could use its payment service GrabPay to transfer credit via a phone number or QR code. The ride-hailing company will open up the service to other merchants in the fourth quarter of this year. Users may be able to earn Grab points when using the service, which can be used to redeem discounted Grab rides.
Meanwhile, gaming products company Razer has submitted a proposal for a cloud-based e-wallet called RazerPay. CEO Tan Min-Liang claims the company can roll out a nationwide e-payment service in 18 months. Razer had previously bought a stake in Malaysian e-payment company MOL Global.
Most recently, on Sept 12, NETS announced its NETS Pay mobile wallet and a system for payments with QR codes. NETS is accepted at 38,000 merchants, which industry watchers say amounts to half of all the merchants in Singapore.
All this sounds exciting. But as The Edge Singapore highlighted in its State of the City column two weeks ago (“As payments council works on national QR code, going cashless still a challenge”, Issue 795, Sept 4), Singapore does not need more e-payment systems. It needs systems that work with each other.
See: As payments council works on national QR code, going cashless still a challenge
Ironically, two of the three companies that announced competing payment schemes have seats within the national payments council.
The council, announced on Aug 2, comprises 20 leaders from banks, payment service providers, businesses and trade associations.
Among their number are Jeffrey Goh, CEO of NETS; and Anthony Tan, group CEO of Grab.
The council’s mandate is to work on frameworks and initiatives that would make strides towards a seamless payment solution, unified point-of-sale terminals for merchants, legislation to protect consumers and innovative payment solutions. It would have represented a break from the status quo of the fragmented payments ecosystem, with solutions competing for terminal space among merchants and app downloads among consumers.
NETS reportedly said it had been working on this QR code since last year, before the national taskforce to establish a common QR code was established. It added that its wallet would work with all its existing partner banks and was designed to support new specifications when developed.
Approached for comment, the local banks emphasised that they continued to seek a unified approach.
DBS Group Holdings says, “A national interoperable system would serve to expand digital payments, reduce overall cash usage, and accelerate the adoption of digital payments in Singapore through its ubiquity.”
DBS CEO Piyush Gupta is on the payments council. DBS has its own e-payment service called PayLah, which the bank says is compatible with the new NETS QR code.
Jacquelyn Tan, head of personal finance services Singapore at United Overseas Bank, says the bank will “continue to work with industry partners to introduce complementary and interoperable solutions to meet the payment needs of consumers and businesses”. UOB CEO Wee Ee Cheong is also on the payments council.
Talk of working together is unlikely to stick with consumers and merchants faced with a bewildering array of payment solutions, though.
While industry players may argue that choice and competition are good for innovation, the difficulty of choosing a single system can be paralysing.
To make matters worse, consumers have shown no inclination to adopt new digital payment solutions. “Not all Singaporean consumers are convinced,” says Adrian Lee, research director at Gartner. “Beyond the establishment of an interoperability policy and standard, there still remains the unenviable task of educating consumers to adopt the new digital payment standards.”
Lee says the government’s desire to create a unified digital payment standard is a good one, but that this is not a “build it and they will come” situation. “Consumer education remains critical. And so far, we have not seen any clear plans on how this will happen,” he says.
Should the government go a step further and mandate cooperation? Sui-jon Ho, IDC’s senior market analyst for financial insights in Asia-Pacific, says pre-existing technologies already fragment the market. Government intervention can therefore be “far more efficient than allowing market forces to dictate the flow of IT usage”. In Thailand, he says, regulatory leadership was able to drive market convergence.
Other industry watchers point out that industry consolidation is likely to happen on its own anyway. “It will be very messy for the next 12 to 18 months,” says David Su, managing partner of China-based venture capitalist Matrix Partners China. “There are likely to be two to three major players after that. I suspect NETS will be one of them.”
But if Singapore hopes to go cashless before then, the various players may need to work even more closely together. That means they have to do more than launching solutions that work together. They should be jointly educating consumers and easing the path towards adoption, which may mean forgetting about the race for market share.
