Going cashless quickly is wise

Going cashless quickly is wise

Going cashless has been in the news here of late, with Prime Minister Lee Hsien Loong touching on the topic during his National Day Rally speech and the Land Transport Authority announcing that public trains and buses will go fully cashless by 2020.

While some remain unconvinced of the benefits of shifting from cash to e-payments, the reality is that consumers stand to gain from going cashless.

A key advantage is convenience. Swiping a card or tapping your phone is faster than paying with cash, and there is no need to make a trip to the ATM.

Although some consumers worry about the security of e-payments, given the cyber-attacks and hacking happening worldwide, the actual rates of cyber-crime are low and banks have protections in place.

The biggest benefit, though, may be the discounts and rewards consumers can receive.

Take credit cards, for instance. Use a credit card for payments and you can get everything from a 6 per cent back for online shopping with the OCBC card to an 8 per cent rebate from Citibank on your groceries and more than a 20 per cent off your petrol purchases. Other cards as well have perks that cater to various spending habits.

For a long time, people whose incomes were too low to apply for a credit card lost out on these benefits. Now, though, debit cards as well offer discounts and perks.

OCBC gives 1 per cent back when you pay with a debit card, for example, while POSB gives up to six times points and DBS gives up to S$50 back on foreign currency spending.

Even the newest digital payment platform here comes with rewards, for now. PayNow makes instant payments to friends or merchants more convenient, as users only need to key in the recipients’ mobile number to send them money. To promote the platform, some banks are offering rewards for people who sign up. DBS gives chances to win S$500 through the end of November, for instance, and Maybank ups the ante to S$2,888.

A key challenge, however, is that cards or mobile payments are not yet accepted everywhere in Singapore. Indeed, most hawkers and many small merchants still only accept cash.

Tellingly, as PM Lee said in his National Day Rally speech, 60 per cent of transactions here still involve cash or cheques. In comparison, more than 80 per cent of transactions are cashless in Sweden.

There are signs that merchants, who have been loath to offer digital payment options because fees can exceed 3 per cent, may get help sooner rather than later.

New services, for instance, are making it cheaper to accept PayNow and cards. Merchants can sign up with Stripe to accept PayNow, for example, enabling consumers to tap their card on a phone that accepts “NFC” payments or allowing the merchant to type in transaction details. Stripe says merchants pay just 0.5 per cent when consumers use PayNow.

While few banks or other service providers offer such a low fee, the coming wave of a single payment terminal at merchants, using QR codes for payments, and the emergence of more mobile payments could all begin to bring costs down.

And for merchants, some studies show that up to 1 per cent of cash disappears through errors or theft, so going cashless may eliminate some hidden costs of cash.

New technologies and platforms will continue to emerge in the e-payments scene, which could bring costs down further.

And as has happened when central banks in some countries in the region intervened to bring down merchants’ costs, it’s not unthinkable here that the government’s push to expand could lead to a similar result.

So, seizing on the convenience, discounts and lucky draws that cashless payment options currently offer makes more sense than waiting for a perfect option to emerge sometime in the future.

The fact is that the situation will keep on changing. Why miss out when all it takes is downloading an app or signing up for a card?

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