In Singapore, the race to dethrone cash as king of payments, with lessons from China

In Singapore, the race to dethrone cash as king of payments, with lessons from China

Hawker centres are shaping up as the battleground for a raft of mobile wallet providers working to introduce improved plans.

In the debut of Why It Matters, presenter Joshua Lim looks at what stands in the way of Singapore going cashless. He heads to China to experience the mobile payment revolution for himself and meets with tech giant WeChat to find out how they manage to get people to leave their wallets at home.

SINGAPORE: Mr Sahat Wahab’s nasi padang stall at Tiong Bahru Market is among the vast majority of its 80-plus stalls without a mobile payment option - this, despite a trial that concluded last year.

Only an estimated one in six offer that option at the food centre, whose history predates World War II.

Mr Sahat, for example, has his concerns. about mobile payments.

“If there’s a problem with the machine (at peak hours) … our customers would definitely run away,” he told the Channel NewsAsia programme Why It Matters. (Watch the episode here)

Hawker centres - with their more than 14,000 licensed hawkers across the island - are the battleground for a game of thrones happening now, among mobile wallet providers gunning to be the top payment platform on Singaporean consumers’ phones.

The likes of Visa, DBS Bank and Nets are among at least a dozen players in a race as they work on better electronic payment plans they hope to introduce to hawkers and the general public, for whom cash remains king.

Much is at stake, not only for the companies but also for the adoption of mobile payments as part of the Republic’s Smart Nation vision.

cashless sg 3

According to accounting firm Ernst and Young (EY), which collects data on mobile payment methods in 20 economies, targeting hawker centres is crucial here. It is one of the lessons from China’s move towards cashless transactions.

“The hawker centre is the last mile where, if we can get the hawkers and the consumers to adopt e-payment more readily, that would really drive up these transactions,” said Mr Liew Nam Soon, EY’s managing partner for financial services in Asean.

(Read: How WeChat helped spark China's cashless revolution)


The Chinese learning experience, he continued, "has been (that) the QR code is a cost-effective way to address high-volume, low-value transactions... It’s a cost-effective way to get the adoption up.”

QR (Quick Response) codes are barcodes containing information such as the bank account details of a merchant. Scanning one allows a consumer to make payment.

And to get more hawkers to come on board, local payment network Nets is coming up with QR codes on invoices so that hawkers will not need cash to pay their suppliers either.

That was another concern Mr Sahat had about mobile payment systems. “At this moment, I think only the stallholders (use them)," he said.

How about our suppliers, like the veggie supplier, egg supplier, tofu supplier?They say they still prefer cash.

Solving this has to be part of building a cashless ecosystem, acknowledged Nets chief executive officer Jeffrey Goh. “We have to look at it from the holistic viewpoint,” he said.

cashless sg 6
Mr Sahat Wahab, who runs a nasi padang stall, says his suppliers still want cash.


Another pain-point stopping some hawkers from going cashless is their reliance on transient workers, payments technology company Visa found from a recent survey of 24 vendors.

“So the solution we need to introduce, or plan to introduce, for hawkers has to be a solution which is very simple and requires almost no training,” said Ms Ooi Huey Tyng, Visa country manager for Singapore and Brunei.

But even among hawkers who have adopted QR code payment, which is easy enough to use, doubts remain. Mr Leo Mak, who runs a drink stall at Tiong Bahru Market, thinks the system might slow down the transaction process.

Whatever I sell is (done) very fast – 30 seconds … (Now), I still have to look at people’s screens to see that (the payment is) successful.

A solution may be in the offing. DBS Bank plans to roll out a set of features for hawkers after looking at the “user journey” for its PayLah! app, one of the first mobile wallets launched by a bank here.

“We’re still developing it, but that new feature set will allow … you to change the fonts on your phone so that, basically, they become a lot more legible,” said DBS consumer banking group vice-president Kevin Lau.

“We’re also contemplating adding new features which allow hawkers to easily see when somebody has paid them through PayLah! … This could be in the form of a live feed on the app or through sound notifications.”

cashless Sg 4


Given the manpower crunch in Singapore, food and beverage outlets such as hawker stalls would benefit from going cashless, as seen from the productivity gains in China.

But a mindset change, among other things, is needed

(Read: Going cashless at hawker centres: Challenges and opportunities)

Despite the high smartphone penetration rate in Singapore, where there are more phones than people, mobile payments have been slow to take off.

A survey done by EY found that out of every 100 Singaporeans, only 38 are comfortable paying with their phones, compared with the global average of 50. In India, that figure is 72, and in China, 83.

cashless sg 2

The adoption rate is growing across many countries, particularly in the Asia-Pacific. But this aspect of financial technology disruption has stalled in Singapore because “we have many options”, said Mr Liew.

For consumers to adopt mobile payments, there has to be a real differentiation, a real benefit … in terms of over and above using cash.

Visa’s Ms Ooi agrees. “Cash is just as convenient in most people’s minds, unless there is a compelling reason to change,” she said.

Nets - which recently launched its mobile wallet app, NetsPay, and will roll out this payment mode at all its 100,000 acceptance points by the middle of next year - wants to boost usage by wooing consumers with discounts.

“I can reward you for something that you’re doing every day. Wouldn’t you be interested, for example, if I can work with my partners and offer you a discount on your breakfast?” said Mr Goh.

The app digitalises the plastic ATM card users traditionally carry so that they can scan a QR code on Nets’ point-of-sale terminals.

“Therefore, we need to re-educate our users on how to use the digital card to make payments. And (the second thing), using the gamification side of things, is to push more value-added services onto the phone,” added Mr Goh.


Discounts to attract customers are a feature of the digital wallet service WeChat Pay that maker Tencent Holdings touted to merchants in China as a selling point when getting them to sign up.

Watch: The WeChat experience (3:43)

But companies like Nets will not be borrowing cashless processes wholesale from China.

For example, Chinese merchants are satisfied that they have been paid just by seeing that customers have scanned their QR code, said Mr Goh, whereas Nets is providing merchants here with a terminal that will print a notification receipt.

Singaporeans, being a little bit kiasu … want it to be safe. They want to make sure someone will pay them at the end of the day.

DBS, which has over 600,000 registered PayLah! users since its 2014 launch, has found that another successful practice in China - the giving of digital hongbaos (red packets) among WeChat’s millions of users - did not suit Singaporeans’ liking.

The bank incorporated this function in PayLah! two years ago, but “it didn’t quite fit in with the customer journey during Chinese New Year”, said DBS Bank head of cards and unsecured loans Anthony Seow.

“Because the typical way is when (you) go visit, somebody would wish you, and you wish the person back by giving the hongbao, so that part can’t quite happen when it’s electronic,” he said.

DBS is redesigning this feature to increase the adoption rate. That is not all it is doing. PayLah! used to offer mainly peer-to-peer money transfers but now has more services, such as payment of bills, service and conservancy charges and taxes.

“We’ve also done a cosmetic and technical revamp of the platform. We changed the colour… to dragon fruit because, based on our user research, we found that it was a more millennial-friendly colour,” said Mr Lau, referring to most of the app’s users aged between 24 and 36.


Change and innovation are needed quickly in Singapore’s cashless payment scene, said EY’s Mr Liew, because of the risk of a foreign player potentially coming in and taking over “a large part of the payment processing”.

Already, Chinese tourists are “helping Alipay to expand” here because they do not carry much cash, as is their wont back home, and expect to use the e-payment platform offered by the other technology giant behind China’s cashless revolution.

cashless sg 1

“Alipay has also said (that) at some stage … they’d very likely open it up to Singaporeans,” said Mr Liew.

When that really happens, then you got a serious, proven competitor in our marketplace. So there’s no time to waste.

Over at Tiong Bahru Market, Mr Mak has encountered “quite a few” Chinese visitors who did not have Singapore dollars. “They asked if they could use renminbi here,” he said, which was why he took up the mobile payment option.

The competition to become Singapore’s WeChat or Alipay now includes Apple and Samsung, with mobile wallets pre-installed on their phones; and tech companies, such as Grab, Fave, Liquid Pay and Razer, besides the three local banks.

This crowded scene is the reason the Government is pushing for a unified QR code that will be able to accept any of the mobile payment vendors. Merchants would then not need to print out different QR codes.

There is another incentive for Singapore to adopt mobile payments. Southeast Asia’s consumer spending is expected to reach US$2 trillion (S$2.72 trillion) by 2020.

The business opportunities include the advantages fintech and other companies can gain from data-mining their users, a benefit the Chinese economy has been reaping.

For consumers, mobile payments can save time through the integration of services if they can, for instance, choose their food, order and pay with a few taps of the finger, like diners in China do.

In future, phones might not even be needed. Biometric payments are slowly being piloted elsewhere, while a game of catch-up is in full swing in Singapore.

Read Part 1: How WeChat helped spark China’s cashless revolution. Can Singapore replicate its success? Watch the season premiere of Why It Matters (new episodes every Monday).

Source: CNA/yv