Singapore's Electronic Payments Bloom Amid COVID-19

Commercial Banks' Q1 Cash Withdrawal and Deposit Amounts Down 11%
Mobile Payment 'PayNow' Transactions Double to 34.4 Million

[Asia Economy Singapore Correspondent Seo Jumi] Singapore is accelerating its transition to a cashless society. The "cashless society" is a major pillar of Singapore's vision for a smart city, and as the novel coronavirus disease (COVID-19) rapidly spreads, the proportion of cash usage is also decreasing accordingly.

According to local media such as The Straits Times on the 2nd, DBS, Singapore's largest commercial bank, saw an 11% decrease in cash withdrawals and deposits in the first quarter of this year compared to the same period last year. The annual average decline rate of cash transactions in Singapore has been about 5% since 2017, but this year the decrease reached twice the average.

While cash transactions declined, digital transactions such as internet and mobile payments surged. The Association of Banks in Singapore announced that from early this year to April, "PayNow" transactions?a real-time payment system using mobile phone numbers?reached 34.4 million, nearly doubling compared to last year. Additionally, remittance services between government agencies and businesses increased fivefold from 600,000 to 3 million during the same period. This indicates that electronic payments for businesses have become a necessity, not a choice, in the COVID-19 era. A recent survey by global credit card company Visa also showed that the proportion of consumers using mobile payments in Singapore rose by 12 percentage points to 56% compared to last year.

Along with this, cases of paying workers' salaries online have increased. Foreign workers in Singapore, who live communally in dormitories and have become major infection sites for COVID-19, saw a significant rise in new account openings and deposits for salary payments during this period. According to Singapore bank POSB, migrant workers in Singapore opened about 41,000 accounts in April alone, which is three times the average monthly number of new accounts.

This change became evident after the Singapore government mandated employers to pay salaries electronically to workers residing in foreign dormitories to prevent further virus spread. This enabled general transactions such as remittances to families in their home countries or topping up international prepaid phone cards to be conducted contactlessly (untact).

Moreover, the proportion of mobile and electronic payments minimizing contact during purchases of groceries, daily necessities, and takeout food is also rapidly increasing. Especially small-scale merchants who previously insisted on cash payments are voluntarily adopting untact payments. The government is also preparing support measures for them. Recently, the Singapore government announced a fourth financial support package to prevent economic shocks caused by the COVID-19 crisis. This includes allocating emergency funds of 500 million Singapore dollars (approximately 438.3 billion KRW) to accelerate digital innovation and promote electronic payment adoption.

However, considering that the average age of traditional market merchants is over 60, there is also an opinion that guidelines and preliminary education should accompany the use of digital payment systems in their businesses.