The new NETS system for faster settlements represents Singapore’s latest drive towards a cashless society. Will it bring the hawker-driven small payments sector on board?
By Sangeeta Deogawanka
Singapore’s tryst with cashless retail payments began in 1985 with the introduction of the NETS Electronic Fund Transfers at Point of Sale (EFTPOS) system that allowed purchases at retail outlets using an ATM card.
The result of a concerted initiative of three major banking players, DBS Bank, OCBC Bank and United Overseas Bank (UOB), NETS has been at the forefront of Singapore’s cashless drive ever since. Improvements in internet connectivity and cloud technologies, coupled with the widespread adoption of mobile devices and applications, have now created the ideal space for online driven e-payment solutions.
The drive for a cashless society is revolutionising the retail landscape with instant e-payments
Singapore has traditionally been a cash-driven society, and this has not changed overnight. Cash is still used in 60% of transactions.
The Singaporean government adopted a cashless roadmap to reduce the high costs of processing cash and cheques. At about 0.5% of Singapore’s gross domestic product (GDP), a cash-driven economy costs the country as much as S$2 billion per year (US$1.5 billion).
The introduction of PayNow in 2017 enabled inter-bank transfers to facilitate cashless payments. However, it was the success of the NETSPay and NETS QR in cash-based sectors like hawker centres that have opened up e-payments for small purchases.
The NETSPay mobile wallet allowed customers to make digital payments using their smartphone. Then NETS QR unified all QR code payments in a single e-payment terminal, saving businesses counter space that was previously taken over with contactless and chip-based terminals and QR codes.
The SGQR system introduced by the MAS, combines multiple e-payment solutions in a single QR code label. This facilitates a seamless payment system at any retail outlet. The simultaneous introduction of FAST (Fast And Secure Transfers) payment system, also enables customers to transfer funds from one participating Singapore bank to another instantly. Together, SGQR and FAST have enabled 24/7 payments that was not previously possible.
In an environment where retail merchants are tying up with e-wallets like GrabPay for round-the-clock payments, this opened up the retail space to the wider adoption of digital payments.
Cash is still king among small vendors
Despite the progress in the e-payment landscape, hawkers across the 114 public hawker centres have been slow to adopt electronic payments solutions. Transactions at hawker stalls are small and even with the SGQR and FAST payment systems, it still took too long for e-payments to process. Payments received on Fridays, for example, would take the entire weekend to be processed and the hawker would not receive the transaction amounts until the following week.
However, from January 17th, this should no longer be a problem. NETS has rolled-out its new facility that processes payments faster. Hawkers will now receive their sale proceeds the same day, including weekends, and public holidays. Payments through NETS received before 5pm “will be credited to their DBS, OCBC or UOB accounts by 11pm on the same day. This includes Quick Response (QR) code payments via DBS PayLah!, OCBC Pay Anyone and UOB Mighty but excludes CashCard and Nets FlashPay transactions”. Payments
The benefits of faster payment processing will be welcomed across the nearly 12,000 stalls at hawker centres, coffee shops and canteens.
NETS is pushing to get hawkers on board
NETS will be the only party to reconcile accounts, so stallholders do not need to deal with different e-payment companies.
As part of the unified payment framework, NETS will provide hawkers a payment terminal for card payments and a SGQR code. This will consolidate the heterogeneous e-payment sector under a unified system for seamless cashless transfers.
To encourage cashless inclusion, hawkers will incur no charges for the first three years after they register with NETS. The government will instead foot the bill for the 0.5%inter-payment system transaction charges. This also means that hawkers will not have to pay any onboarding fees— a potential gamechanger for cashless inclusion among small vendors.
What does this mean for the Hawkers?
For a cash-driven hawker environment, this latent NETS facility enables the frictionless receipt of sale totals. Many of the niggling issues hawkers faced with e-payment are addressed with the NETS same-day payments. The advantage of having 20 e-payment systems unified under one umbrella opens up sales to a wider customer base.
With the Singaporean government’s push for hawker culture as a tourist draw, multiple e-payments and unified speedy settlements will enhance the tourist experience and drive hawker sales.
Same-day receipt of the money helps hawkers make vendor payments the same day. This is of significance, as small stall owners do not receive credit from suppliers. Hawkers can also set aside amounts from the daily proceeds for savings or P2P transfers, thus paving the way for wider financial inclusion.
Faster settlements for hawker payments is a win-win situation, giving that much needed fillip to the hawker market sector while adding meat to the cashless initiative of Singapore.