SINGAPORE (Apr 14): Singapore became the third country in the world to adopt Google Pay after the US and India, with the US tech giant partnering local banks to integrate its peer-to-peer (P2P) fund transfer service with Singapore’s existing PayNow service.
The move comes amid attempts by the Singapore government to encourage the use of e-payment among Singaporean businesses and consumers. In his 2017 National Day Rally speech, Prime Minister Lee Hsien Loong called for the simplification and integration of e-payment systems to catch up with other advanced cities in terms of e-payment usage.
PayNow itself was developed for this purpose: the integrated P2P fund transfer system was formed by nine banks to better coordinate the local e-payment ecosystem. Users are able to pay and receive money to and from their bank accounts by linking these to their mobile phone numbers or Unique Entity Numbers (UEN), allowing for quicker and simpler transactions to take place.
“OCBC has long been a champion supporting open payment ecosystems and promoting national payment schemes…Singaporeans continue to significantly increase their use of PayNow [and] We believe that our partnership with Google Pay will continue to help drive this trend in 2020 and beyond,” said Mr Ching Wei Hong, Head of Global Wealth Management & Consumer Banking at OCBC, whose customers will be the first to link their accounts to Google Pay.
Under this partnership, Google Pay will tap on existing PayNow infrastructure to facilitate P2P fund transfer between users while allowing users to link their credit cards to the app as well. Google will on its part provide front-end development for the app, offering services such as food delivery and movie ticket bookings as well as providing rewards and incentives for users such as scratch cards and lucky draws.
Such a move appears calculated to compete against the rise of super-apps such as Grab and GoJek in Singapore’s lucrative e-payment market. Super-apps provide a wide variety of integrated services ranging from e-payment such as GrabPay, to food delivery and online shopping, allowing them to outcompete firms providing fewer services.
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A joint survey by e-commerce firm iPrice Group and data provider App Annie Intelligence in 2019 found that GrabPay was the most popular e-payment platform in Singapore. Grab claims that cashless usage on its app is 1.3 times greater than average e-payment usage nationwide.
“Mobile commerce is well-established in Singapore and is creeping towards accounting for half of all online sales: it already makes up 42.3 per cent of all completed e-commerce transactions, or $2.1 billion in sales. Mobile commerce sales are expected to outpace overall e-commerce growth, expanding at a compound annual growth rate of 18.1 percent to 2021, to reach a value of $4 billion,” noted a JP Morgan report in 2019.
By combining their distinct expertise, both Google and local banks will be able to better compete against the all-encompassing capabilities of super-apps in this growing market.
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Banks will be able to tap into Google’s expertise with online user experience to create more attractive e-payment services to draw lifestyle-focused users. Meanwhile, Google can piggy-back on domestic e-payment infrastructure and the local expertise of Singapore banks to better integrate e-payment into its growing catalogue of services (e.g. flight bookings).
The new partnership could possibly herald a relative decline in the prominence of the e-wallet method of e-payment, which requires clients to deposit money from their bank account into an “e-wallet” to pay for items. The strengthening of direct money transfer systems through this collaboration promises to spare clients the hassle of having to regularly top up their wallets and the potential loss of interest on money deposited into the wallet.
"We have long rejected the ‘digital wallet’ approach that requires customers to top up an e-wallet and hold funds in one without earning interest,” said Ching, “Instead, we put a lot of effort into developing OCBC Pay Anyone as an open-loop payment system, whereby customers literally ‘pay anyone’ directly from their bank accounts… With Google Pay strengthening it further, we expect to see the continued rise for the adoption rate of digital payments solutions...in Singapore.”
Banks were quick to allay cybersecurity concerns associated with working with Google. While the tech giant’s Google+ social networking function suffered two data breaches in 2018 that released the personal information of more than 500,000 users, it has since taken steps to protect users such as by introducing its Advanced Protection Program for high risk users and acquiring cybersecurity firm Chronicle to help develop cybersecurity solutions.
According to DBS, which has agreed to link its credit and debit cards to Google Pay, “like all Google products, Google Pay comes with strong security protections at its core to continuously and automatically safeguard your account and personal data from security threats. And when you pay in stores, it shares a virtual account number instead of your real card details with the merchant. In other words, it’s got your back so your real card details stay safe.”
