SINGAPORE: She recently bought a shirt in a shop, using mobile wallet DBS PayLah! That was when Tan Wen Hui found out that getting one’s money back — after a botched funds transfer — may not be so straightforward.
She had keyed in the wrong mobile number, sending the money to the wrong person. “I started to panic,” she recalled. “I didn’t bother to check (the number) because … I just wanted a very fast transaction.”
The 21-year-old contacted the bank, but it was unable to help her. So she messaged the recipient instead. “The person … was very nice. He actually PayLah! me back the amount,” she said. “The person could’ve just ignored my message.”
She was lucky to get her money back.
Digital wallets are the second-most popular e-commerce payment method in Singapore, after credit and debit cards. But in terms of consumer protection, they may be one of the worst, as the programme Why It Matters finds out. (Watch this episode here.)
WHOSE MONEY IS IT?
There are as many as 23 ways to e-pay in Singapore, such as via GrabPay and UOB Mighty.
Seven in 10 Singaporeans use a digital wallet, according to business consultancy McKinsey and Co. And digital wallets account for 14 per cent of all e-commerce transactions here, representing sales of S$680 million, JP Morgan reported this year.
There are more than a million transactions a month on DBS PayLah!, for example. But if one transfers money wrongly to another account holder, the payer is advised to contact the recipient directly.
DBS senior vice-president (Consumer Payments and Platforms) Tri Arini Melati explained that the bank cannot reverse such transactions instantly, as it needs to seek the recipient’s consent.
“We aren’t able to … take the monies,” she said. “And we won’t be able to determine whether the case is really a wrong transfer.”
The payer, however, can see the mobile number that was wrongly typed in, she noted. “You can contact the recipient. And you’d be surprised that they’d acknowledge it and return your money.”
The incidence of wrong transfers is very low, she added, citing the fewer than 0.001 per cent who reach out to DBS for more help to contact the recipients.
But what if the recipient refuses to return the money? Loh Kia Meng, chief operating officer of law firm Dentons Rodyk, said the money still legally belongs to the payer.
“You can take action against him to take back what’s rightfully yours,” he said. And anybody with the intention to use money that is not theirs could be jailed for up to two years and/or fined.
So long as the notification is sent to you, whether you threw it away (or) didn’t read it ... you’re deemed to have had notice of it.
In such cases, the payer can make a police report or sue the other party.
THE LEAST PROTECTION
When it comes to refunds, the process is relatively straightforward and instantaneous if consumers had paid via credit card, PayPal or even PayLah! as demonstrated by Thomas Po, co-founder of online grocer Zairyo, which accepts a range of e-payment methods.
But it gets trickier if there is a dispute between the retailer and the consumer.
A credit card user can ask the issuing bank for a chargeback, which is a reversal of the payment. If the card provider decides in the buyer’s favour, he gets the full sum back from the retailer.
If he used PayPal, he could dispute the transaction in his PayPal account.
For example, if an item does not arrive or is “significantly different” from how it was described, “all you have to do is let PayPal know”, said its Asia-Pacific head of information security, Phoram Mehta.
“PayPal’s anti-fraud capabilities, artificial intelligence and people (would) investigate that case and … are able to refund you,” added the man whose job it is to ensure that users are not defrauded of their money.
For those who use mobile wallets, however, getting a refund when there is a dispute is not so easy.
“It’s (at) the mercy of the merchant to decide whether or not to refund the customers. It’s (a matter of) goodwill,” said Po.
FOR LOW-VALUE USE
But even as more consumers are using e-wallets, the number of online complaints from payers making wrong transfers has decreased, said Mark Cheng from financial portal MoneySmart.
This is because consumers have become more familiar with these payment platforms, which have also evolved over time, for example with the availability of peer-to-peer funds transfer service PayNow.
“People can now transfer bank-to-bank much more easily,” he pointed out. “In the past, you (had to) put in a whole string of digits … nine to 10, I think.
“I used to stare at my phone and scrutinise the numbers to make sure that I was keying (them) in correctly.”
While the rise of mobile wallets has raised questions about the need for some kind of protection system for such peer-to peer transactions, this would have cost implications, said EY global emerging markets fintech leader Varun Mittal.
“If you’re offering protection where a customer could say, ‘I didn’t do this transaction’, then you need to have a mechanism to service that request,” he said. “So either the merchant … or the consumer needs to pay.”
Mobile wallets are primarily focused on high-frequency, low-value use cases, such as food purchases, he cited. “The mobile wallet’s premise is that (and) not … let’s say, S$5,000 transactions. So that’s not what they’re designed for,” he added.
Watch the episode here. Why It Matters is telecast every Monday at 9pm.