By now, most of us have seen what transpired between the public Twitter bromance between PM Lee Hsien Loong and Razer CEO Min-Liang Tan. The result is much-hyped proposal for a national e-payments solution.
Let’s look at what is really required for Singapore to go cashless and why the proposal is likely to be as useful as Razer’s multi-coloured lights: looks good on a specs sheet (16.8 million colours!) but not very practical, when you actually think about it.
What’s Needed For The Singapore Cashless Revolution
There are two fronts on which the cashless revolution needs to happen: the consumers and the merchants. If the value proposition for either side isn’t strong enough, then the transition would stall.
You can roll out tens of thousands of cashless Point-Of-Sale systems, but if customers are not sold on the concept, they will continue to request to pay in cash.
Conversely, even if customers wish to pay using cashless methods as their primary choice, if insufficient merchants accept them, then cash is here to stay as the main mode of daily transactions.
Consumer Adoption of Cashless
For consumers to turn to cashless payments, low barriers of entry and usability are crucial.
Low barriers of entry mean that cashless payments must not leave anyone out, even if they do not have access to a credit card, or may not know how to use a smartphone. In other words, the cashless future in Singapore needs to be inclusive and have measures to take care of those on the fringe.
For usability, cashless services need to beat cash payments in speed and convenience of payments. If the proposed cashless solution is even 10% slower than handing over physical notes and getting change, then that would mean a 10% inefficiency distributed nationwide. Paying attention to the various use cases and carefully doing user testing is a necessity.
Going cashless has other theoretical benefits, like ease of splitting the bill in a “go Dutch” satiation or negating the need to carry large amounts of cash. But these have proven not to be strong enough to influence consumer behaviour in any significant way. Just ask DBS PayLah.
Merchants Offering Cashless Payments
On the merchant side, cost of transaction and consumer demand are the main drivers. If enough customers ask for cashless payments, sooner rather than later, the merchants be obliged to offer it, if the fees are reasonable. As a business, the whole thing must make financial sense. Towards this end, government or e-payment providers offering incentives can do a great deal.
Why (Not) Razer?
In the time needed to produce a school assignment (two weeks!), Razer published their proposal for Singapore to go cashless in 18 months.
Min-Liang and Razer’s efforts are laudable in the extent they were able to stir up interest in cashless payments among Singaporeans, especially the younger ones. Even if real e-payments experts and armchair e-payments experts didn’t gush about proposal, Razer at least started more conversations on what a national e-payments system should look like.
The claim that Razer can push out the initiative in 18 months really reeks of hubris. They have not even hinted that they are cognisant of the multifaceted issues on the road of going cashless, let alone have an idea how to solve them. Note that Razer’s proposed e-payments system RazerPay, should not to be confused with RazorPay, an Indian digital payments provider.
When addressing the fact that Razer does not currently have experience or expertise in the e-payments space, they highlighted that they have run a credits system where gamers can buy games online as well as their desire to hire Singaporeans for their e-payments effort. Running an online store where users have credits isn’t the same thing, is it?
As for the hiring of Singaporeans part, one does wonder if their prospective new hires read Razer’s statement that in the event another e-payments solution becomes the de facto standard, Razer will “cease the focus on RazerPay and support the said third party e-payment solution”. Let’s hope that their e-payments system security is tighter than job security at Razer.
Razer also wrote that their proposed system will be unified and interoperable with all other e-payment solutions. This comic sums up how this will likely end up:
Whatever the cashless system and provider we end up adopting in Singapore, the move towards a cashless economy is inevitable. Already, there are pilot efforts to address some of the challenges to widespread adoption. Perhaps Razer would take a page from these industry veterans. We for one are keeping an eye on developments, 18 months and beyond!
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