On the heels of Singapore Prime Minister Lee Hsien Loong’s recent call to stimulate and grow e-payment adoption countrywide. one of the nation’s largest payment solution provider, Nets, is set to debut its e-payments app in October, according to a report by The Straits Times.
This is part of Nets two-year plan to capitalise on the growing mobile payments space — and also a play to consolidate all its payment services, which span across verticals such as transportation and retail, into a single platform.
The app, called NetsPay, will enable users to store a digital version of their Nets-supported ATM Card on their smartphones or wearables, such as smartwatches. Users will make payments at tapping these devices (NFC-supported only) on a Nets Point-of-Sale (POS) terminals or by scanning a product’s QR code tag.
This is in line with the Singapore government’s plan to build a universal QR code service.
Over 30,000 NETS POS terminals will be able to accept NetsPay once it launches; that number will double by end of the year. By 2018, Nets plans to roll out the technology to all of its 100,000 terminals across the country.
NetsPay will also hit the ground running with one unspecified bank partner and eventually plans to integrate all its bank partners — OCBC, UOB, HSBC, DBS, Maybank and Standard Chartered.
Beyond the retail sector, Nets will integrate its QR code payment system at carparks, starting with those at Changi Airport. Nets is also seeing applications in the food sector. Last week, it began its advance on hawker centres — an industry largely untapped by e-payment providers; chiefly because stall owners are reluctant to adopt them (they cite complexity and high costs) — launching its QR code payment systems at about 50 hawker stalls. It also has plans to allow restaurant patrons to pay via QR code.
Nets said it will incentivise hawkers to adopt this system by waiving fees for three years.
Nets is also in talks with vending machine operator Kalm to integrate QR codes into over 300 vending machines, according to a report by Today.
Other areas in Nets crosshairs include e-commerce transactions. Currently, consumers can use the eNETS option on a merchants site if they wish to pay by NETS; but it involves at least six steps, which include entering one’s banking account details and the six-digit secure pin. Replacing that with the NetsPay QR code makes online transactions far more seamless.
Will Nets emerge as the dominant e-payments provider?
With Nets’ entry, the stakes in the e-payments race have been increased. According to Nets’ official statistics, over 1 in 3 Singaporean use Nets every day. Last year, Nets logged over S$24 billion (US$1.78 billion) in transactions.
“The NetsPay is an excellent solution. They already have a large database of consumers and merchants, so they don’t have to spend much money acquiring these divisions,” said Atul Garg, CEO and Co-founder of Singapore-based fintech startup SingX, in an interview with e27.
He added in many cases, financial service providers only either a large volume of merchants or a large volume of consumers; but never both. So this puts Nets in a good position, having had ample time to gather a large volume of customers over the course of three decades.
Jerry Tan, the Asean and Strategic Partners Marketing Manager for app performance company Dynatrace, is erring on the side of caution.
“It is too early to say whether [Nets will become the dominant provider], it all depends on the user’s habits and behaviour,” he told e27.
“User experience will be key — both from the merchant and consumer side. You have to think about the cost of the QR terminal, system connectivity, and the general infrastructure,” he said.
He added that reliability of the system will be key because there may be in peak in transactions during certain periods, so the system will need to be robust enough to handle large volumes of sales.
“As more merchants sign onto a payment system, the ecosystem will become more complex, for example instead of using one NETs point-of-sale system, there could be many more systems including different kinds of Android phones, iPhones, etc. The solution provider’s’ accountability and responsibility to ensuring a smooth user experience can become more daunting under such a scenario,” said Tan.
“Now that there’s a push from the government to eliminate cash from our everyday. It’s going to be tough though. Singaporeans are used to simple, single systems that work, like our EZ-Link cards for transport and cashcards for parking. While providers may be able to create agnostic systems that accept say 80 per cent of digital payment forms, it’s the sell-in to and take up by consumers and merchants across various touchpoints that will determine who wins or loses,” said Gurmit Singh, Chief Marketing Officer, e-payments enabler Red Dot Payment.
“Developers, vendors, banks, regulators and other participants trying to build some traction in the cashless payments space will need to survive this period of friction and jostling to get some skin in the game, maybe slightly bruised skin at the end. Already PayNow has somewhat disintermediated our local bank attempts at marketing peer-to-peer transfers via their respective e-wallet solutions. We also now see DBS and OCBC pushing their own QR code systems for paying at hawker centres. There will be a need for standardisation and partnership, followed by consolidation and acceptance to make any significant headway. It’s inevitable,” he added.
Education and awareness will also be crucial. On this point, Jerry Tan provided a personal anecdote.
He was talking to his colleague about how he was excited about the NFC e-payment function of his new Samsung Galaxy Note phone, when the latter informed him that the function had already been present in previous iterations; he was just unaware of it. Tan said that the marketing and promotion of NetsPay — especially to less tech-savvy users — will be crucial.
Tan, however, agreed with Garg that Nets already has the leverage given its huge user database and experience in the payments field.
Against Nets, gaming company Razer, which submitted a proposal to develop a national e-payments system, will be at a considerable disadvantage because it has neither the e-payment infrastructure (besides a stake in Malaysian virtual currency platform MOL), the user base to match, nor the expertise.
In a Today report, however, both parties have expressed their desire to support each other’s service. Nets CEO Jeffrey Goh said that if Razer develops a successful e-wallet, he will allow them to integrate Nets’ QR code system. A Razer spokesman said it was encouraging that Nets was stepping up to the plate.
Nets has everything in its favour to become the e-payments provider for all Singaporeans, but there are also other tech companies who are casting their bid.
Singapore-based fintech startup Silot announced today its plan to also build a QR code e-payments service in the country. The startup is backed by Zhen Fund and is made up of a team consisting of personnel from Chinese tech giants Baidu, Alibaba, and Tencent as well as notable e-payment firms such as PayPal and Braintree. Silot has already launched a QR code e-payments service in Australia in partnership with SuperPay.
Grab recently expanded its e-payments platform GrabPay beyond its vertical. The ride-hailing giant said over 75 per cent of its users rely on GrabPay, so like Nets, it can afford to spend less on user acquisition.
Image Credit: Nets