Singapore to be cheque-free by 2025

The government wants to reduce cash and increase e-payments.

Singapore aims to be cheque-free by 2025 in order to pave way for more e-payments which are “better than cash and cheques,” Minister for Education Ong Ye Kung said.

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He said in a speech to the Association of Banks in Singapore (ABS) that Singapore’s aim is not to be a cashless society, but to use less cash and more e-payments. Cheques are not in the picture, however.

The decision to be cheque-free followed Singapore’s several initiatives in its drive for a cashless society. “The take-up for PayNow has been good,” Ong said. “Today, there are more than 1.4 million PayNow registrations, and nearly $900m has been transferred via PayNow since its launch last year.”

Moreover, the share of cheques as a proportion of all payments using FAST, GIRO and cheques was about 28% in 2017, down from 37% in 2015. Ong said the aim is to bring that down to 15% in 2020.

Singapore also aims to reduce the amount of ATM cash withdrawals by 20% in 2020. They comprised almost 60% of e-payment transaction value measured by FAST and card payments and came down to about 40% at the end of 2017.

The minister also shared other e-payment projects coming up in Singapore.

When the Land Transport Authority (LTA) enhances public transport payment systems, bus and MRT fare readers will also behave like a Unified Point of Sale (UPOS) terminal. UPOS terminals accept whatever users’ preferred e-payment mode is – be it NETS, regular debit or credit card, contactless cards, ApplePay, or Google Pay.

The SG QR will also take effect later this year. “All service providers, including e-wallet providers, will have to adopt SG QR for scan-and-pay. With the SG QR, consumers will be able to scan a single QR code regardless of e-payment platforms they use, be it NETSPay, Dash, Grab or PayLah!,” Ong added.

The industry will also extend PayNow, which is currently a service provided to consumers, to businesses. This will allow firms to link their Unique Entity Number (UEN) to their bank accounts, removing the need to know the firm’s bank account number.

“It will be like what consumers are experiencing in China, where they scan QR codes for payments everywhere, but with a few crucial differences,” Ong said. “Payment deduction is directly from our bank account and not through an e-wallet. And there will be one standard QR code throughout Singapore – I believe no other country has this.”

PayNow will also now enable businesses and organisations to make mass disbursements to individuals, or B2C (business to consumer) payments, through their mobile or NRIC numbers.

The minister added that users that link their NRIC to their bank accounts before the disbursement of SG Bonus at the end of the year can expect to receive the money earlier via PayNow than through direct bank crediting or cheques.

The Monetary Authority of Singapore (MAS) will also be introducing a new Payment Services Bill later this year, to enhance the payments regulatory regime and strengthen safeguards against risks.

“The Bill will identify all activities along the e-payment value chain, such as e-money issuance, domestic funds transfer and merchant acquisition by payment platforms, and will regulate them under a single framework. Many of these activities are currently either not regulated or lightly regulated,” Ong added.

Moreover, Ong said Singapore’s e-payment landscape is different compared to other countries like China. “In countries like China, where e-payment is much more recent, they simply leapfrogged the previous technologies and payment methods,” he added.

Singapore has also allowed more competition and innovations instead of having one or two players dominate the market. If the latter happened in the context of Singapore, “there will be significant downside risk in the long term due to a lack of competition, especially when the dominant player wields significant market power, and owns all the transaction data and customer information,” he said.

Over time, this can slow down the rate of innovation, and give rise to the risk of unfair pricing for customers, Ong added.

“Our goal is to allow for a variety of payment solutions that are competing yet inter-operable and convenient, providing choice to consumers and encouraging innovation,” he said.