When diffusion hits a snag

SINGAPORE'S fintech sector will receive a significant boost, with the passing of the Payment Services Bill, as it considerably strengthens consumer protections.

Specifically, it will regulate the issuance of e-money, so that the funds we have in our e-wallets (including those for peer-to-peer transfers) will be protected by legislation. Personal e-wallets will also receive added safeguards in the form of e-wallet and transfer limits, offering greater protection to vulnerable users such as the elderly and the young. These measures will help to raise consumer confidence in e-payments and help Singapore catch up with its regional neighbours in areas such as mobile payment adoption, thus advancing our push to go cashless.

It is indeed surprising that despite Singapore's early embrace of cashless payments, we are not further along in realising our vision of a cashless society. After all, electronic payments have deep roots here. Over three decades ago, in March 1985, the government launched the National Campaign to Minimise Cash Transactions to urge Singaporeans to undertake more financial transactions electronically, to heighten productivity, reduce costs and make cashless payments a way of life. This three-month campaign successfully convinced more Singaporeans to switch to receiving their salaries through direct credit to the bank, pay bills electronically via GIRO, and make purchases through the Electronic Funds Transfer at Point of Sale service. This historical context provides very useful clues to help us understand our relatively slower uptake of newer e-payment services such as mobile payment. Precisely because of our mature financial ecosystem, consumers are well-accustomed to, and very well-served by NETS and credit cards. But how do we explain the fact that cash remains the favoured payment option for small-value transactions such as those in hawker centres, convenience stores and taxis? Why has mobile payment not been more avidly used for such transactions? Notably, in countries such as China, even street peddlers accept mobile payments!