IT took a trip to Sweden for Visa Singapore's country head to confirm that Singapore is a victim of its own success where its cashless pursuit is concerned.
Singapore, which holds about 5 million people, has about 2,700 ATMs scattered across the island. Sweden, with a 9 million population, has just 3,200 ATMs.
"If you benchmark with the likes of Sweden, we're nowhere there. That's the vision forward," Ooi Huey Tyng told The Business Times. "Cash is a stubborn habit."
Visa had learnt from 24 hawkers in Singapore that the attachment to cash is an emotional need and hawkers were concerned that the older consumer segments will be alienated by cashless payments and might avoid frequenting the hawker stalls.
Ms Ooi points to Singapore's reputation for being very efficient and very safe, which does not give people the motivation to go cashless. With cash easily accessible, the quandary for Singapore becomes clear.
Statistics show that on average, 30 per cent of transactions in Singapore are still done in cash, with the use of cash pervasive at hawker centres and among small merchants. "We have to educate consumers that cash is not free," she added.
There's also an over-reliance on cheques, with 51 million cheques issued by businesses and the government in 2015 alone to transfer S$524 billion that year.
Contrast this with the experience in Sweden, where Ms Ooi met locals who were in their 30s and who had never written a cheque. In the 1990s, the Swedish banks started charging for cheques, and the use of plastics took off. Ms Ooi thinks charging for cheques is one step that Singapore has to take to get rid of cheques, which take days to clear as opposed to immediate electronic fund transfers.
For Visa Singapore, its global reach means it sees Singapore not just as a domestic market, but as a means to target tourists. "Singapore is just too small to solve for the domestic market," said Ms Ooi. "What we want to ensure is that it is interoperable."
As at August 2017, Visa payWave has reached nearly 60 per cent in Singapore, with more than 9 million Visa payWave transactions conducted per month. Visa has driven more e-payment in areas such as fast-food joints, and has worked with major food chain Food Republic to roll out Visa payWave. But there's more to be done - 80 per cent of transactions at food courts are still done in cash.
And here, Ms Ooi throws down the gauntlet, noting that the financial industry needs to collaborate - whichever digital payment option offered by any bank should be accepted by competing banks or financial institutions.
"The consumer experience has to be seamless, it cannot be worse than contactless," said Ms Ooi. This also means that for merchants to join any electronic payments scheme, the on-boarding process has to be simple.
Ms Ooi offered a broader perspective. Given the new digital economy, the idea of ring-fencing existing profit amid lower barriers to entry is not the viable business model for the days ahead.
"There's no concept of a captive audience," she said. "This concept will be obsolete. The key is that we solve from the pain point to differentiate ourselves."
She pointed again to Sweden, where the financial industry collectively launched a peer-to-peer payment scheme, known as Swish, and it was universally adopted by consumers there. In Singapore, the introduction of PayNow came after a few banks had launched their own version of peer-to-peer fund transfer.
Ms Ooi takes her own lesson to heart. In Visa's pilot test of transit payments in Singapore using Visa cards, it roped in Nets to trial this auto-debiting system. The move is significant, given London's example. Contactless payments took off there through transit, she pointed out.
As Singapore now tries to ride the cashless wave by using QR codes, what would help to remove the confusion is to unify the type of QR codes used by merchants. By the end of this year, Singapore is looking to develop a common QR code that can accept both domestic and international payment schemes.
Thailand has leapt ahead on this front. From May, consumers hold a Mastercard, UnionPay International or Visa card can use a mobile app to scan the merchant-presented QR code. Merchants need to display only one QR code. And as the standards are intended to be globally interoperable, consumers from Thailand will be able to use the same standard QR code function to make payments in any other country that uses the same QR code.
Singapore can do the same, said Ms Ooi, noting that the standardised QR code function can also be applied to merchants that use only Nets.
SMALL MERCHANTS' PAIN POINT
Visa is also looking at a low-cost model to work with smaller merchants that are keen to provide contactless payments, with Ms Ooi dismissing the idea that fees alone are crimping demand for cashless payments. Visa is open to have an "incremental" model to support merchants as they build up volume for their business by driving up efficiency. This is particularly applicable to hawkers in Singapore, where Visa's research has found that hawkers do not see handling cash as a pain point.
Instead, a problem for them is shortage of labour, and cashless options can help to ease the labour burden. Visa's research showed that Visa payWave is the top mode of e-payment that these hawker merchants are familiar with, followed by the Kopitiam card. Contactless payments are seen to benefit tourists and younger consumers.
Hawkers are willing to accept charges similar to Nets pricing of 0.8 per cent.
"There has to be an economic model. How long can you do it for free? How long can people just support this, if in the end, there is no money to be made? It has to be an incremental one," said Ms Ooi.
"Paying some cost is not an issue. If a S$5 bowl of noodles means taking a few cents, they are okay with it as long as you give them value."