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In his latest National Day Rally speech, Singaporean Prime Minister Lee Hsien Loong contrasted Singaporeans’ highly connected lifestyle and digital literacy with their slowness in adopting digital payment. The concept of making transactions with your mobile phone has been around for many years and has been successfully implemented in countries much larger than Singapore.
Mr. Lee pointed out that the country has a natural advantage in that it is compact and highly connected. With the highest smartphone penetration rate in the world, why is Singapore still lagging behind?
Cash may be considered king, but there is a cost to handling it — from the time taken to count it, to store it securely, and then finally banking it. Going cashless makes business operations simpler and easier, allowing business owners to save precious time and money.
Without being able to make payments to merchants, users cannot go completely mobile. Having to switch between mobile and cash for different kinds of payments means users still have to carry around their wallets anyway. This incomplete ecosystem makes it really inconvenient for users to make the switch to mobile payments.
Mobile payments are already wildly successful in China
Denizens of most major Chinese cities have already been paying with digital wallets for more than three years.
In 2014 for Chinese New Year, WeChat introduced a feature for distributing virtual red envelopes, modeled after the Chinese tradition of exchanging packets of money among friends and family members during holidays. A month after its launch, WeChat Pay’s user base expanded from 30 million to 100 million users.
Right after the introduction of the red envelope on WeChat, both WeChat and Alipay invested millions to expand the usage of mobile wallets across the nation. On 8th Aug 2015, Tencent initiated the historic 8.8 Cashless Day, with the participation of more than 100,000 merchants across China. In 2016, the event grew exponentially to include more than 700,000 merchants.
To replicate China’s success requires investment from both regulators and private companies
In the private sector, two IT giants, Alibaba and Tencent, invested millions of dollars to promote their mobile wallet solutions. At the same time, China also saw a huge demand for mobile wallets from business owners. Although China is known for its huge population, labor costs were increasing rapidly. As a result, business owners in China have adopted new technologies to deal with this reality, and payments are an important piece of the puzzle. Furthermore, because of the ease and ubiquity of mobile payments, the biggest beneficiaries have been small businesses, the hawkers, vendors and street food peddlers, not just the established restaurants, hotels and banks
Finally, smartphone penetration has reached 80% in China’s major cities. Compared to credit cards, mobile wallets are more accessible to customers, and wide adoption from merchants of all sizes made it the obvious choice for a large majority of the population.
In the public sector, People’s Bank of China (PBC), the regulator of monetary policy in China, has the control over all financial institutions, including WeChat Pay and Alipay. The PBC’s establishment of a clearinghouse for mobile payment service providers made it convenient and enabled its widespread adoption.
The Chinese government has been efficient in promoting new technologies, but so too is the Singapore government. Although Singapore is a smaller market, it still has many of the conditions that make it favorable for a mobile payments revolution.
The Singapore government is finally building the regulatory infrastructure, and MAS will make it happen by year’s end
Recognizing that having too many different payment schemes and systems in Singapore is impeding progress and confusing consumers, PM Lee said that the industry should “simplify and integrate” during his 2017 national day rally.
Within a month, the Monetary Authority of Singapore (MAS) established the SGQR (Singapore QR) Taskforce, aiming to have a standardized solution to accept both domestic and international payments in place by the end of 2017. This will bring about many impactful changes in financial institutions and with merchants within the next 6 months.
Before 2017 is over, Singapore will have a common QR code, allowing consumers to pay electronically anywhere by scanning a QR code with their smartphones. After that, as long as they have the right services, it is only a matter of time before Singaporeans form a new habit of making mobile payments.
Instead of having so many e-payment players, it is far better to shoot for compatibility of these systems
Since 2015, FOMO Pay has been working to build online/offline QR code payment partnerships with merchants in Singapore, and FOLAH is striving to be the app that will condense that work into a seamless mobile payment experience for Singaporeans. FOLAH combines different payment methods into a single QR Code that the merchant can display in physical stores. To make payment, customers scan a QR code and enter the amount due to the merchant.
With more than 1,000 merchant partners in Singapore and many brands already using their mobile payment services, FOMO Pay’s FOLAH wants Singaporeans to finally be able to leave their wallets at home. Currently, FOMO Pay provides payment channels for Visa, Mastercard, UnionPay, and an array of other Chinese e-wallets.
FOMO Pay has established itself as one of the most promising fintech startups of the year. It’s been selected as one of the top 100 Asian Companies by publications such as E27 and Red Herring Asia, and named one of the Top 8 startups under DBS’ FinTech Accelerator Program.
PayNow, Singapore’s only other mobile payment system so far, will face difficulties integrating merchant transactions because of the need to get participating banks to agree on terms for settlement. FOLAH will simply integrate PayNow as one of FOLAH’s payment method so that users can have the complete experience they need. With the knowledge & technical expertise to replicate China’s success with mobile payments, FOLAH promises to bring more convenience to both consumer and merchants to Singapore and the region.
As smartphone penetration continues to increase, the adoption of mobile payments is inevitable, in Singapore as well as the rest of Southeast Asia.