When PM Lee set the agenda during his National Day Rally 2017 speech, everybody listens.
Enter scores of cashless payment initiatives, such as Razer’s Tan Min-Liang’s e-payments proposal, integrated peer-to-peer funds transfer service PayNow, QR code payment features in our local bank mobile wallets, being pilot tested in hawker centres, and even the introduction of a vision for public transport to be fully cashless by 2020.
The efforts to go cashless are laudable, with innovations are implemented even in cash-heavy sectors such as hawker centres, promoting inclusion as much as possible. The government has even turned to crowdsourcing for ideas to inform Singapore’s e-payment efforts.
Some people love the idea of going cashless and the benefits it brings, such as convenience, a seamless retail experience and having every cent accounted for. There are also others who are concerned about the unbanked, cash-heavy sectors, and the less technologically inclined.
So why, despite the huge challenges, is Singapore government pushing so hard to move towards cashless society? We look at some strategic reasons that could be behind this.
#1 Taking the lead in an inevitable process
It is hard to find anyone who would disagree that sooner or later, cashless transactions will be the norm, and perhaps even the only way people transact. Since this is so, it would make sense that the government would want to manage the way Singapore goes cashless. They do so by being pro-active and providing regulatory support (Payments Council), grants for e-payments and all sorts of cashless initiatives.
But why not let the private sector develop organically and lead the way?
First, the government is in the best position to help. Our government has quite an efficient track record of rolling out policies on a large scale, like public transportation, telecommunications, infrastructure projects, etc. Collaborating with the private sector can provide them with necessary support (regulatory, advisory, infrastructural and funding) to make such a shift and encourage bolstered growth and innovation.
#2 Going cashless increases transparency
In the case of China’s e-payments adventure, mobile payments providers such as Alipay enabled Chinese customers to move directly from cash to e-payments with digital wallets on their smartphones, bypassing payment cards issued by banks and the central bank’s clearing system. This makes it difficult for regulators to keep track of how money is being moved, which opens up the possibilities of money laundering and fraud.
Thus, by pro-actively taking the lead in crafting standards and laws, the Singapore government can ensure that regulators and the authorities will not miss out on monetary transactions being made electronically. Improved transparency in terms of financial records enables the government to better track where money is being moved, which helps to deter and punish scammers.
In addition, real data about the way we actually spend our money can be harnessed to help the government better devise and implement policies based on actual data, rather than costly and periodic surveys and sampling of real-world transactions.
#3 The need to be forward-looking
Singapore’s leaders want to ensure Singapore doesn’t get left behind in a rapidly changing world. This extends beyond the cashless society and reaches to the Smart Nation initiative as well.
Singaporeans have always been pretty ahead of the curve, leading the world in adopting computers, smartphones, the Internet of Things and big data. Singapore needs to continue to evolve with emerging technologies that will inevitably change the way we live, work and interact.
The same goes for going cashless. To make sure Singapore stays ahead, the push to go cashless is justified, even necessary. For example, Singapore could stand to lose substantial tourism revenue if Chinese tourists come for a holiday expecting to use e-payments, only to find out that we do not widely accept e-payments.
The motivations of the Singapore government’s push to go cashless is more practical and less ideological. Undoubtedly, Singapore has the resources, population demographic, and infrastructure to go cashless. We’re also small, so top-down initiatives can be implemented rather easily. That being said, there remains plenty of work to be done. For example, providing digital banking literacy campaigns and infrastructural support to facilitate a quicker, organic adoption of cashless payments may prove to be more effective than legislating a removal of cash top-up services from MRT stations.
Read Also: Going Cashless: Who’s Left Behind?
DollarsAndSense.sg aims to provide interesting, bite-sized financial articles that are relevant to all Singaporeans. Subscribe to our free e-newsletter to receive exclusive content not available anywhere else. Also follow us on Instagram to get your dose of finance knowledge visually.
Bonds and Fixed Income
Savings & Spending