·New PayPal research reveals the economic challenges faced by people in Singapore that primarily use cash
·Consumers and businesses that primarily use digital payments enjoy real financial benefits from that choice
·Industry players and government bodies need to partner to create a common payment infrastructure to drive adoption of digital payments
29 AUGUST 2017, SINGAPORE – New research from PayPal reveals that the adoption of digital payments is having a big impact on the financial lives of consumers and businesses in Singapore.
Findings from the PayPal study,
“Digital Payments: Thinking beyond Transactions”, which surveyed 4,000 consumers and 1,400 merchants across seven markets in Asia
[1], of which 500 consumers and 200 merchants were from Singapore, highlights the positive impact digital payments can have on consumer and merchant welfare by reducing inefficiencies and unlocking economic opportunities.
Consumers: Digital payments adopters enjoy greater benefits
Cash remains the primary method for conducting transactions in Singapore, but it is not without faults. The survey uncovered consumer problems when it comes to cash transactions, including having insufficient cash on hand (44%), facing long queues at Automated Teller Machines (ATMs) (44%) and ATMs not being easily accessible (34%).
Digital payments offer not just convenience and a more secure way to pay, but it also provides consumers with more options. Most respondents (69%) cited convenience as a reason to use digital payments. Another 38% said it was because of the increased amount of promotions they received as compared to 26% who use traditional methods (physical credit card, bank transfer / internet banking, cheque etc.) and 19% who use cash.
The study also revealed that digital payments have provided consumers with the tools to better manage their finances, in particularly, one of the most challenging financial issues faced by consumers – bill payments. Among those surveyed, 43% of consumers who rely on cash have difficulties managing their bills / credit payments compared to a smaller proportion (22%) of digital payments users. The ability to track payments, pay instantly, and the choice of payment methods can be a boon to managing consumers’ cash flow and their financial health.
Businesses: Digital payments generating more income streams
Digital payments offer a transformational solution for businesses because they increase convenience for consumers. They also enable new economic opportunities, such as helping businesses generate new income streams. Thirty-four percent of businesses surveyed in Singapore said that they are able to reach a wider audience by selling online.
The role of social media is transforming beyond a networking platform to a digital marketplace. This is further boosting the adoption of digital payments with its ability to offer seamless payments between businesses and consumers.
Eighty-five percent of merchants surveyed who have turned to selling goods and services on social media, of which digital payments is a key transaction method, are seeing positive effects on their financial health. Of this group, a significant 88% mentioned that social commerce has widened their reach beyond Singapore and 84% are convinced that social commerce helped grow their business.
Businesses reap large efficiency gains transitioning from cash to digital payments and by moving away from manual to electronic financial tracking. The benefits to business owners range from reduced operational costs, convenience of transactions to allowing new business models, such as social commerce, to solidify.
“Singapore has always been a frontrunner in innovation to adapt to remain an economic leader on the world stage. We have done very well in the past five years in taking full advantage of technology to open doors for greater economic opportunities, and integrating digital payments into the everyday lives of our citizens. At PayPal, we are committed to improving the financial health of our customers and equipping them with the right tools through the products and services we develop to enable individuals to seize economic opportunities. The launch of PayPal.Me for Business for instance, enables businesses to create a payment link that can be shared on newer platforms including instant messengers,” said Rahul Shinghal, General Manager, PayPal Southeast Asia.
Driving digital payments for a financially healthier Smart Nation
The positive impact that digital payments can have on the welfare of individuals and businesses are significant but the ripple effect on the economy is even more promising. Financially healthy individuals spend their money at local businesses and start companies of their own. Financially healthy businesses create jobs that pay good wages and support the economic development of communities.
As Singapore advances its Smart Nation vision, the adoption of digital payments will propel economic growth and serves as an enabler of improved economic growth and financial health. Digital payments are already impacting the way Singaporeans make payments for everyday transactions and retail e-commerce. Singapore is one of the most digitally literate countries globally but the current usage of digital payments is only scratching the surface of what it could be. Industry players and government regulators within the payment ecosystem need to collaborate to further drive adoption of digital payments and unlock the full potential of this new payment method.
“We have found that one of the key reasons Singaporeans do not use digital payments is due to privacy concerns (51%). The relationship we have with our consumers and business owners who use PayPal is a two-way street. We want to provide assurance and education to our users to shift their mindset and in return, earn their trust. Protecting the interest of our users is as important as investing in a security infrastructure. On top of ensuring full financial information is not shared with merchants when purchases are made, we have safeguards such as PayPal
Buyer Protection for consumers and PayPal
SellerProtection for businesses that provide ease of mind when they conduct their transactions online,” said Shinghal.
“We are already taking great strides in making digital payments part of our daily lives, but as rightly pointed out by Prime Minister Lee Hsien Loong in his 2017 National Day Rally Speech, we still have some ways to go. Our report also shows that Singapore is lagging behind cities like China (87%) in the adoption of digital payments. PayPal does not operate alone in the digital payments ecosystem and we are always on the look out for partnerships and to continue conversations with the government and industry players to find newer and better solutions.”
[1]Markets surveyed - China, Hong Kong, India, Indonesia, the Philippines, Singapore and Thailand.