Cards come out tops in Singapore.
In terms of monetary value, credit cards accounted for 36 per cent of all point-of-sale (POS) transactions made here in 2022, followed by debit cards at 21 per cent and cash at 19 per cent.
Credit cards were used in 42 per cent of e-commerce transactions, although digital wallets came in a close second at 32 per cent. Debit cards trailed at 11 per cent, with cash on delivery accounting for a mere 1 per cent of the total transaction value.
These were some of the findings from the FIS Global Payments Report 2023, released by Worldpay on Tuesday. Worldpay’s parent company, FIS, provides technology solutions for financial institutions and businesses across industries globally, and has been publishing the report annually since 2015.
The report measured the monetary value of e-commerce and POS transactions across various payment methods, including digital wallets such as GrabPay, Google Wallet and Apple Pay, credit cards and “buy now, pay later”, a type of short-term financing without interest charges or fees.
In the Asia-Pacific region, digital wallet usage is expected to account for the most e-commerce (73 per cent) and POS (59 per cent) transaction value by 2026. In 2022, it was 69 per cent and 47 per cent respectively.
The report found the adoption of digital wallets by Singapore consumers lagging behind that in other South-east Asian markets, particularly for POS transactions, where e-wallets came in at 18 per cent in 2022.
Ms Yvonne Szeto, vice-president for commercial Asia-Pacific at Worldpay (FIS), believes this is “just a function of consumer habit”, given that credit cards are an established payment method in Singapore. Habits could change over time, especially with many retailers in Singapore now offering digital payment methods of various sorts at the point of sale.
Vantage Markets’ global payment manager, Mr Edward Ong, noted that shopping behaviour is ingrained, adding: “Everyone uses credit cards. (They know) which card to use when shopping for groceries and which one gives you the best cashback... so it’s very hard to change this behaviour.”
Singapore is a “very mature market” where the availability of credit cards and cards of all types is well established, observed Mr Nagesh Devata, senior vice-president for the Asia-Pacific at Payoneer. It also has more alternative payment providers meeting different consumer segments, including wallets provided specially for cross-border use or gaming.
He added: “Consumers are spoilt for choice... You start to think about how to compartmentalise your spending as a consumer. Do I use my card for certain types of transactions? You know, maybe I only use it for travel, but maybe for my daily use, I’m going to use my e-wallet.”
It would also be helpful for merchants to understand their customer demographics and payment preferences, suggested Ms Szeto. A recent survey by Visa showed that more than 40 per cent of Singaporeans chose not to make a purchase when they encountered a shop that lacked digital payment options.
Ms Szeto added: “For example, the younger generation, such as millennials and Gen Z, prefer that one-click checkout experience using the mobile phone, and perhaps the older generation do prefer (using) credit cards, debit cards and even cash. It’s just about offering various options to your customers and speaking to the payment service provider to understand the market you operate in.”
With so many different payment providers on the scene, it is essential for them to build trust and credibility with consumers and businesses.
Mr Devata said: “If you think about the significance of a wallet, it’s trust. It’s the ability to hold your funds, and you should feel secure (enough) to put your funds there regardless of whether you’re going to be using them for purchase or whether you have to wait before you want to spend it.
“That’s the important part when I think of wallets... of having some structure and some guidelines around wallets for both consumers and small businesses that use or depend on wallets. Having that confidence is key.”
