NETS was the brainchild of prominent banks. Its wide consumer and merchant base make it well-placed to lead Singapore’s QR code payment industry.
By Joelyn Chan
32 years ago, Singapore’s leading local banks founded the Network for Electronic Transfers (NETS). DBS Bank Ltd, Keppel Bank, OCBC Bank, OUB, POSB, Tat Lee Bank and United Overseas Bank Limited created the network. Its aim was to drive the adoption of electronic payments in Singapore.
NETS claims that 1 in 3 Singaporeans use NETS every day. It currently has more than 100,000 acceptance points at 37,000 merchants. Chief Executive Officer of NETS, Jeffrey Goh said, “over the past three decades, we’ve worked tirelessly to build the hardware – the infrastructure necessary to achieve an e-payments society, increasing the number of NETS acceptance points and introducing digital payment methods such as QR code.”
Source: NETS
NETS’ strong support from banks carves out its position in the industry
Banks and NETS are players in the payment field. But banks do not pose any threat or competition to NETS. When NETS announced its new QR code-based platform in November 2017, there were seven banks onboard. The seven banks – DBS/POSB, OCBC Bank, UOB, HSBC, Maybank, Standard Chartered Bank and Citibank – covered 90% of Singapore’s retail transactions. With so many banks on board, NETS will be able to become a unified QR code payment platform for Singapore.
DBS has previously promoted and installed its PayLah! QR code payment solution at 1,700 hawkers and neighbourhood shops. However, NETS’ entry into the market will replace PayLah! in the hawker scene. According to a correspondence between The Straits Times and DBS, “NETS will replace these (PayLah! QR code) with the NETS QR code.”
NETS has a history of dominating the payment system market
In 1997, NETS CashCard became the sole payment mode for Singapore’s road toll payment system. In 2015, Land Transport Authority and NETS jointly created NETS Virtual CashCard (vCashCard). It let customers pay road fees (ERP charges) using their credit or debit cards.
The high volume of consumer penetration and widespread merchant acceptance ensured NETS’ success. The established customer and merchant base will help NETS roll out its QR code payment platform. The associate professor of information systems at Essec Business School Dr Jan Ondrus said, “NETS already has a merchant and customer base. They do not have to roll out a new payment infrastructure on the merchant side, besides the QR code, to acquire payments at the point-of-sale.” This puts NETS in the optimal position to become the unified QR code payment platform for Singapore.
NETS is helping Singapore move towards its Smart Nation goal
NETS’ extensive cashless payment network works in Singapore. Cash-based transactions currently add up to S$1 billion (US$740 million). If NETS can successfully install its QR code in hawkers, Singapore will be one step closer to its Smart Nation dream.
NETS chairman Tan Su Shan said: “NETS and the Singapore banks support our national agenda to build a Smart Nation powered by a smart national e-payments solution. With the myriad digital payments choices available today, consumers will be looking for one that is ubiquitous, simple and safe.” Indeed, NETS is well positioned in the local scene. Banks and ministers already favour NETS. It already has the upper hand over other entrants like Razer, Grab Pay and Liquid Pay.
To stem off competition, NETS will waive transaction fees for the next three years. By then, it may have secured its monopoly and position as dominant e-payment option.
Will NETS expand abroad?
NETS is targeting expansion in China and Indonesia. A partnership with QR code payment providers in these countries could allow Singaporeans to pay with QR codes via their banks or NETSPay apps abroad.
This may still be some way off. NETS launched eNETS online payment a full five years after launching NETS cash card. Each new launch takes an average of three or four years.
NETS continues to lead Singapore forward
NETS is looking cement its position as the unified QR code payment network within Singapore. Once it is entrenched at the top, expect NETS to begin expanding operations abroad. First Singapore, then the wider ASEAN region. The payment network has a legacy behind it and bright future ahead of it.
