It seems that Singaporeans are not performing up to standard as a Smart Nation, or at least, that’s what Prime Minister Lee Hsien Loong implied in his recent National Day Rally Speech.

The anecdote to prove his point: Manpower Minister Lim Swee Say’s discovery that even roadside hawkers in China selling chestnuts were technologically advanced enough to accept electronic payments.

Considering that this is the same guy who had said: “Heng ah!” for not being a Chinese citizen, he probably went a bit nuts at such a discovery too.

PM Lee and Lim Swee Say are not alone when it comes to feeling that Singapore is lagging behind in e-Payment adoption. Chinese netizens have too expressed that Singapore is rather… primitive in this respect. There is also a running joke that even beggars in China would rather not accept cash donations.


No spare change? Just scan QR code.

Pros and cons of going cashless

While it does seem more convenient to get rid of the small stack of paper and plastic in your wallet and pay for everything through your phone, imagine not being able to buy anything as soon as your phone battery dies.

It would be assuring to know that without actually carrying a physical wallet with you, it is harder for people to steal/rob your money from you. Although it is almost impossible to recover stolen cash, you can shut down a digital wallet remotely if it falls into the wrong hands.

However, you now have to worry about identity theft and hackers, or higher level thieves who find ways to exploit the new system.

It certainly saves time to pay with a tap or wave of a smartphone, not to mention that you don’t have to wait for the cashier to count the change. You pay the exact amount, which leaves you no bothersome coins to carry around, wondering where to spend them.

You might even save a bit of money by paying exact, though there is also a higher chance that you might unknowingly spend more as you don’t feel your wallet getting lighter.

At the surface level, perhaps it takes someone a bit more kiasu (scared to lose) to want to go cashless. It doesn’t feel cool to lag behind China and get called a suaku (mountain turtle).

But we are also reluctant to kick-start the cashless revolution as we are more or less a bit kiasi (scared to die)—What if the new payment system screws up every once in awhile like our SMRT trains?

Actually, it is more than feelings of rational and irrational fear.

Sure, going cashless is cool, but it is still kind of bo hua (not worth it) here, explained Singaporean business owner Lim Jialing, who runs an online chocolate shop.

Based on his Facebook post, Singapore’s slow ePayment adoption can be attributed to three main reasons.

1. Higher transaction costs here

Lim pointed out that transaction costs in China are 0.35% per transaction for debit card and 0.45% for credit card, but 2.5% to over 3.0% here.

These are the costs imposed by the local banks in Singapore, which online payment portals have to follow, he said.

2. Smaller businesses that don’t enjoy economies of scale are less likely to benefit

While larger merchants might find transaction cost just a “nominal” fee, the 3.0% shaved margin (whenever a cashless option is exercised) can mean “make or break” for smaller businesses, said Lim.

In other words, if business owners are reluctant to make use of cashless technology here, it’s not really because they are lazy or obiang (old-fashioned) or dumb, but because they would rather be safe than sorry, and not incur significant losses for going cashless.

3. Banks here are not making things much more convenient either

Furthermore, Lim also found that our existing local ePayment application (he cited the example of DBS PayLah and PayNow) is nowhere as easy to use as its Chinese counterpart Alipay.

Despite being an adopter of DBS PayLah since its inception, Lim did not seem to like the tedious process whereby both merchant and customer have to confirm that the payment is made.

Merchants who do high frequency, low volume transactions would find it extra troublesome.

Another inconvenience lies in the fact that the ePayment or mobile payment market in Singapore is a rather fragmented one—there isn’t one app that everyone uses, which extends across all customer touch points.

For instance, Lim mentioned in a Facebook comment that it’s “pointless” that PayLah’s functions only apply to DBS account holders and it cannot “talk” to other bank apps.

Nevertheless, going cashless is still a change to come

Despite the naysayers and the existing obstacles, Razer chief executive officer was confident that he could get an ePayment system “rolled out nationwide in 18 months”, to which PM Lee replied: “Make me a proposal, and I will study it seriously.”

Meanwhile, the Land Transport Authority (LTA) is contributing to the “go cashless” wave by setting our public transport network to go fully cashless by 2020.

Whether we like it or not, such a trend is hard to avert. As consumers, sooner or later we have to get used to being less reliant on cash.

And as investors, we can think about the companies that are direct beneficiaries of such a trend, i.e. companies that expertise in cybersecurity and data protection solutions, etc.

We used to say “cash is King”, but who knows, one day, cashless might be King.

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