Payment systems in Singapore have evolved over time as a result of technology advancements, changing customer preferences, and the growth of new financial activities. It has evolved from a system that was mostly focused on paper and cash transactions to one that now includes a wide range of cashless payment instruments as well as fast and dependable clearing and settlement systems.
Singapore, like most other Southeast Asian countries, saw a spike in new-age payment activity in the recent times, with all prominent business platforms seeing increased transaction volumes. According to a Nielsen survey, about 40% of Singaporeans began doing most of their purchases online during the pandemic. Moreover, the residents of Singapore have the highest awareness about contactless and other novel payment methods among all the ASEAN countries.
Given the high levels of financial and digital literacy in the country, the rising optimization about Singapore’s payment innovations is completely justified as well. And as a result, established and growing businesses need to ramp up with these payment innovations quickly in order to match the expectations of their customers.
In this blog, we will see how the ongoing market trends are impacting the payment trends in Singapore and the top payment methods being preferred by customers in Singapore. We will also uncover the challenges faced by businesses while integrating complex payment methods and how to overcome them.
Singapore Payment Trends for 2022
In Singapore, credit cards retain their 42.2% e-commerce market share, while digital wallet growth has taken center stage in 2021. Digital wallets gained 47% YoY, to 29.2%, thanks to the expansion of super app Grab. Through 2025, debit cards, bank transfers, and BNPL (Buy Now Pay Later) are expected to have a major presence.
Cards continue to account for the majority of POS spending, with credit cards (33.9%) and debit cards (20.4%) predicted to maintain their dominance at the POS through 2025. Cash is predicted to fall from 22.3% to 13.2% in 2025, with mobile wallets accounting for the majority of that share. The Singapore FAST (Fast And Secure Transfers) real-time service continues to grow in both volume and value year after year by (53%).
Top 9 Payment Methods in Singapore
Singapore has multiple alternative payment methods and payment service providers. Each of which comes with its own strengths and weaknesses. Understanding and providing prominent payment methods can be a boon for companies as it not only increases checkout conversion rates but also helps with better customer experiences and reduced transaction charges.
Here are some of the most popular payment methods in Singapore that you must know.
1. Credit Card
Credit cards are one of the most popular payment methods in Singapore. Credit cards are so much preferred in the country that more than 73% of Singaporeans own at least 1 credit card. The key credit card issuers in the country include DSB, Citibank, OCBC, HSBC, and UOB. Visa, Mastercard, and American Express are the main credit card merchants with Visa holding a majority share of the market.
During COVID-19, Singaporeans have been increasingly spending online with credit cards. Between January and March 2020, OCBC reported that card spending at online grocers doubled, followed by a 50% increase in spending on both online food deliveries and video/music subscriptions, compared to the same time in 2019.
Cash is the second most popular payment method in Singapore after contactless payments and card transactions. However, consumer payments via cash are expected to decline from 22.3% in 2021 to 13% in 2025. Most of this share is expected to shift towards payment methods like mobile wallets.
3. Digital/Mobile Wallets
According to 2020 research from global fintech group Rapyd, Singapore is one of the top three digital wallet markets in Asia-Pacific. Singapore's adoption of digital wallets has remained uninterrupted for the past few years, thanks to the government's unrelenting attempts to transition the city-state to a paperless economy by 2025. Singaporeans have embraced digital wallets, prompting more digital wallet companies to start and expand throughout the country.
PayPal is the most popular payment gateway in Singapore among digital wallets. Some other prominent mobile/digital wallets in Singapore are Grabpay, AliPay, Nets, PayLah, Dash, FavePay, and Google Pay.
Rapyd Provides a range of financial services like payments, mobile wallets, money transfers, card issuing, fraud protection and more.
GrabPay is a mobile wallet within the Grab app that lets you pay seamlessly for Grab services. Recently, they added more features to make it a more full-fledged mobile wallet.
DBS PayLah! is an e-wallet from DBS bank in Singapore. The mobile app can be used to make online purchases, send money to friends and family as well as pay bills and top up prepaid phone credit. Merchants can use the app to create one-time QR codes that can be used in physical stores.
4. Cash on Delivery (COD)
Cash on Delivery is another preferred mode for customers who wish to make the payment after they have received the goods/services on offer. In Singapore, it is generally preferred by the customers to make the payments in cash.
5. Mobile Contactless Payments
Another popular payment method that gained popularity in Singapore in recent years is mobile contactless payments. Some prominent mobile contactless payment options like NETSPay, SingTel Dash and Visa Pay, dubbed as the "Pays" by industry insiders, use NFC technology to conduct purchases. To make transactions using these payment systems, the user's device must be within close range of an NFC-enabled POS machine or ATM.
NFC-based payments are less vulnerable to phishing attacks since they require two devices to be close to each other to exchange data. To make transactions, several of these contactless payment apps also use QR codes and mobile phone numbers. To make a payment using QR codes, the customer simply needs to scan the merchant's QR code.
6. Direct Debits
Direct Debits allow customers to pay for items by deducting funds from their bank accounts. The merchant debits (or withdraws) the relevant amount from the customer's bank account, which is then transferred to the merchant's account. This normally necessitates prior approval from the customer. This payment mechanism is suitable for automating recurring payments such as utility bills, loans, provident fund contributions, etc.
eNETS is an integrated payment gateway that takes several payment modes and is a product of NETS (Network for Electronic Transfers), a Singapore-based online payments service provider. It accepts all major credit cards and currencies, as well as Direct Debit (online banking payments) from major Singapore and Chinese banks, such as DBS (Singapore and Hong Kong), UOB, OCBC, Citibank, and BNU.
8. Buy Now Pay Later (BNPL)
Amid the worldwide epidemic, shoppers in Singapore are increasingly turning to e-commerce platforms to finish their transactions. As a result, BNPL services have become commonplace. The usage of BNPL payments is predicted to increase significantly during the forecast period, with a CAGR of 25.5% between 2022 and 2028. By 2028, the country's BNPL Gross Merchandise Value will have increased from US$ 507.2 million in 2021 to US$ 3022.3 million.
9. Bank Transfers
Bank transfers are another preferred mode of payment by customers in Singapore. They are usually trusted for payments involving a relatively larger sum of money. Bank Transfers in Singapore are administered through automated clearing house (ACH) networks, which are made up of cooperating financial institutions.
FAST (Fast And Secure Transfers) is a new electronic funds transfer service that allows customers of partner banks to move Singapore Dollar funds almost immediately from one bank to another in Singapore. Here are some of the top banks in Singapore -:
- Development Bank Of Singapore (DBS)
- Overseas-Chinese Banking Corporation (OCBC)
- United Overseas Bank (UOB)
- Standard Chartered.
Local Payment Methods and Rising Complexities for Businesses
How customers choose to pay a businesses is highly influenced by the rapid advancements in technology and the rise in highly disruptive global and socio-economical events, like the recent COVID-19 pandemic is certainly making the situation even worse. Within a matter of a few months, the whole world, including Singapore, saw a drastic shift in the payment preferences of customers.
Such an uncertain scenario where new payment methods are being introduced at a rapid speed creates a very worrisome situation for business owners. Be it conglomerates or small business owners, the changing payment preferences have made it difficult for everyone to maintain a dynamic and streamlined payment system. Integrating new payment methods and onboarding payment gateways and merchants every other month is becoming more and more complex.
This calls for a unique solution that could easily accommodate the varying customer preferences and new payment innovations as they are introduced to the market.
How Does inai Help you with Singapore Payment Methods?
The inai platform is uniquely designed to integrate more than 300+ international payment methods, including the ones widely popular in Singapore. Our revenue optimizer platform provides a single source of integration and connects to multiple payment gateways and numerous local payment methods at once. Inai’s developer-friendly payment integration model helps support flexible business models including e-commerce and other digital marketplaces.
Apart from supporting seamless pay-ins and pay-outs, our platform helps business owners to improve their conversion rates during the checkout process by offering a localized checkout experience (be it payment methods, language, or currency). Fully customizable front-end and best-in-class CXO dashboards ensure alignment with your brand design and assist you in refund management and assessing failed transactions.
Every checkout option we provide securely captures payment method data while fully embedded on your site or in your app. With customizable integration and Enterprise Grade security built-in, our technology makes PCI-DSS and GDPR compliance simple.