Singapore Prime Minister Lee, in his National Day Rally, asked why Singaporeans, when it came to the adoption of cashless payments by means of digital or mobile, were so “Suaku” behind that of adoption of China.
“Suaku” is a local dialect slang used to described someone who is “behind the times”. Though Singaporeans have the technology know-how and are mostly digitally literate, pick up of digital payments have been rather behind the times.
For example, when a local food center was opened after renovation, it was touted to be one of the first food center to full accept payment via the NETS Flashpay or EZlink card. Both are stored valued card payment often used for taking public transport in Singapore.
However, after a year, many of the stalls gave up the NETS Flashpay POS (Point-of-Sale) machines. I have asked some of the stalls and they replied low usage which didn't justify the monthly rental payment for the POS machines.
Singaporeans are a bunch of pragmatic group of folks. For both business and consumers, the pragmatism is magnified.
The goals of any business is the make the most money with the lowest business cost. Consumers, on the other hand, look to purchase goods and services of the best value at the lowest cost. A classic example of capitalism.
To spur digital payments, the benefits of not using cash payment must weight more than the pragmatism, not “Suakuism”.
So why are businesses and consumers in Singapore not adopting cashless payments as fast as their counterparts in China?
As ironic as it is, I believe that the extremely safe conditions of doing business in Singapore plays a hidden role in maintaining the “cash is king” status quo.
In China, the fear of counterfeit reminbis, from both the consumer and business, played the catalyst role of the acceptance of cashless payments.
There have been cases where consumers could have withdrawn counterfeit reminbis from even authorised ATMS. In the transaction process, businesses could receive these counterfeits, thus affecting their cash flows if they are rejected at the banks.
There have also been cases where businesses were known to accuse consumers of paying in counterfeit and demanding more payment in kind.
Cashless payment solves the problem of counterfeit immediately as money is digitally transferred from one bank account to another.
Also, the highest currency in China is the RMB100 note which is about SGD20. Paying larger amounts would mean carrying large bagfuls of RMB100 note which could pose a risk to the carrier of being robbed.
Again, cashless payment reduces the risks of being robbed. Though the mobile phone could be stolen, in built phone security measures could easily foil attempts to hack into the phone and turning it into a brick.
These two fears have been absent in Singapore over the last few years. Strong anti-counterfeit measures have been put in place and laws with heavy punishments have become strong deterrents for the use of counterfeit notes.
Also, Singapore has large range of notes in circulation, from $0.01 to $10,000, has also made it easy for payment at the any shops. Even with GST of 7%, which produces the final bill in the cents, often is round down or up to the nearest ten cents to the acceptance of both the business and the consumer.
Such measures have made cash safe and maintain its reign as King in Singapore.
Besides the safety of cash, the cost of using cash is comparatively lower than accepting cashless payments.
Paying cash does result in manpower having to count money and transport the money to the bank. This might be unproductive but to companies, it is already manpower paid for.
Transacting in cashless payment in Singapore is currently expensive for both business and end users. For example, if businesses were to accept PayPal transaction, they have to pay 3% of the cost plus an additional $0.50.
So if a packet of rice cost $3.00, the business have to take out $0.53 to pay for the transaction. The business have a choice to absorb the cost or make the customer pay for it.
If the business absorb the cost, it affects the revenue. If the cost is passed to the customer, the customer would easily go to another shop to get the same packet of rice at a cheaper price or at the same of $3.00.
For Singapore to adopt digital payment, the digital payment must look to solve a problem. In Singapore, the problems that can spur digital adoption have all been solved.
The adoption of digital or mobile payment lies on Singaporeans to find a problem to solve. Until then, cash will remain king in this island state.
“Suaku” is a local dialect slang used to described someone who is “behind the times”. Though Singaporeans have the technology know-how and are mostly digitally literate, pick up of digital payments have been rather behind the times.
For example, when a local food center was opened after renovation, it was touted to be one of the first food center to full accept payment via the NETS Flashpay or EZlink card. Both are stored valued card payment often used for taking public transport in Singapore.
However, after a year, many of the stalls gave up the NETS Flashpay POS (Point-of-Sale) machines. I have asked some of the stalls and they replied low usage which didn't justify the monthly rental payment for the POS machines.
Singaporeans are a bunch of pragmatic group of folks. For both business and consumers, the pragmatism is magnified.
The goals of any business is the make the most money with the lowest business cost. Consumers, on the other hand, look to purchase goods and services of the best value at the lowest cost. A classic example of capitalism.
To spur digital payments, the benefits of not using cash payment must weight more than the pragmatism, not “Suakuism”.
So why are businesses and consumers in Singapore not adopting cashless payments as fast as their counterparts in China?
As ironic as it is, I believe that the extremely safe conditions of doing business in Singapore plays a hidden role in maintaining the “cash is king” status quo.
In China, the fear of counterfeit reminbis, from both the consumer and business, played the catalyst role of the acceptance of cashless payments.
There have been cases where consumers could have withdrawn counterfeit reminbis from even authorised ATMS. In the transaction process, businesses could receive these counterfeits, thus affecting their cash flows if they are rejected at the banks.
There have also been cases where businesses were known to accuse consumers of paying in counterfeit and demanding more payment in kind.
Cashless payment solves the problem of counterfeit immediately as money is digitally transferred from one bank account to another.
Also, the highest currency in China is the RMB100 note which is about SGD20. Paying larger amounts would mean carrying large bagfuls of RMB100 note which could pose a risk to the carrier of being robbed.
Again, cashless payment reduces the risks of being robbed. Though the mobile phone could be stolen, in built phone security measures could easily foil attempts to hack into the phone and turning it into a brick.
These two fears have been absent in Singapore over the last few years. Strong anti-counterfeit measures have been put in place and laws with heavy punishments have become strong deterrents for the use of counterfeit notes.
Also, Singapore has large range of notes in circulation, from $0.01 to $10,000, has also made it easy for payment at the any shops. Even with GST of 7%, which produces the final bill in the cents, often is round down or up to the nearest ten cents to the acceptance of both the business and the consumer.
Such measures have made cash safe and maintain its reign as King in Singapore.
Besides the safety of cash, the cost of using cash is comparatively lower than accepting cashless payments.
Paying cash does result in manpower having to count money and transport the money to the bank. This might be unproductive but to companies, it is already manpower paid for.
Transacting in cashless payment in Singapore is currently expensive for both business and end users. For example, if businesses were to accept PayPal transaction, they have to pay 3% of the cost plus an additional $0.50.
So if a packet of rice cost $3.00, the business have to take out $0.53 to pay for the transaction. The business have a choice to absorb the cost or make the customer pay for it.
If the business absorb the cost, it affects the revenue. If the cost is passed to the customer, the customer would easily go to another shop to get the same packet of rice at a cheaper price or at the same of $3.00.
For Singapore to adopt digital payment, the digital payment must look to solve a problem. In Singapore, the problems that can spur digital adoption have all been solved.
The adoption of digital or mobile payment lies on Singaporeans to find a problem to solve. Until then, cash will remain king in this island state.
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