SEVEN major retail banks in Singapore are set to launch a peer-to-peer transfer service that promises a seamless way to split the cheque or make home-tutor payments using mobile numbers, with the fund-transfer service potentially extended into commercial transactions as soon as a year's time.
From July 10, customers of participating banks - Citibank, DBS, HSBC, Maybank, OCBC Bank, Standard Chartered Bank and UOB - will be able to use a service known as PayNow, through which they can send and receive Sing-dollar funds. The round-the-clock service is free.
"I'm the queen of analogue, but I think we need to move into the digital world," said Association of Banks in Singapore (ABS) director Ong-Ang Ai Boon in a media briefing on Tuesday. "Customers have been asking for something more convenient... everybody has a handphone."
For customers to receive funds through PayNow, they need to register and link one mobile number with their respective participating banks' accounts. Nineteen banks in Singapore already offer free and 24/7 inter-bank transfers through Internet banking, running on a system known appropriately as FAST (fast and secure transfers).
PayNow runs on this system, allowing the seven banks - which process 90 per cent of the retail transaction volume - to move this fund transfer service onto mobile devices. This service now effectively turns the mobile number into a unique identifier of a banking customer, which is more efficient than using a banking account number as an identifier. Customers can also use their NRIC number to link up with their banking account.
A number of banks in Singapore already have some form of mobile peer-to-peer transfer service, but each has its own limitation. Some only allow fund transfers between customers of their own bank, others require fund recipients to key in their account numbers. Banks are now expected to integrate the PayNow service into their existing peer-to-peer service, or launch them separately as a new application. Most banks are expected to keep the mobile transaction threshold to about S$1,000 a day.
Mrs Ong said there are plans for the service to be extended to businesses. Cheque clearing takes up to two working days, and is relatively more expensive compared to digital payments.
Already, there are signs that customers in Singapore are taking up digital fund transfers. Jacquelyn Tan, UOB's head of personal finance services in Singapore, said that while FAST transactions at the bank have grown about 90 per cent in 2016 from a year ago - averaging S$1,800 per transaction - the over-the-counter processing of cash and cheques has also fallen by 15 per cent over the same period.
"We feel that peer-to-peer payments will take off tremendously," said Ms Tan in an interview. "There will be further displacement of cash and cheque."
FAST transactions in 2016 totalled 27 million and were worth about S$54 billion. Other banks are also reporting higher peer-to peer transfer numbers. Payment transactions on OCBC Pay Anyone - the bank's version of its peer-to-peer fund transfer - have increased four times, and payment volumes have increased 10 times, since last year.
"It's a war on cash," said Pranav Seth, head of e-business, business transformation and fintech and innovation group, OCBC Bank. "We will continue to push the boundaries in mobile and e-payments and continually drive Singapore towards this cashless ideal."
There are currently half a million DBS PayLah! customers. The app also has added QR code payment capabilities, and the bank has aims to ramp up its cashless drive in Singapore with the use of QR codes, with the aim of having more than 30,000 QR code payment acceptance points here by the end of the year. Customers who use DBS's mobile wallet can use the app to scan a QR code generated by the merchants to make payments.
UOB's Ms Tan also noted that the lines between consumers and small businesses are also becoming blurred, with platforms such as Carousell allowing consumers to also sell their wares. Such peer-to-peer transfers can address pain points for such small-time merchants.
"In Singapore, there is no lack of payment options," said Ms Tan, noting that the challenge is to have payments integrated into evolving lifestyles.
Indeed, while the seven banks have made investments to offer these free services, it is unlikely that these institutions are going to charge a fee for this in the future, said Mrs Ong. "This is not where they make the money."