Back to cold, hard cash ?
The move to a cashless society is slow going, as S'porean businesses start restricting card payments
"Minimum $20 for Nets" said the small sign announcing that the bookstore which used to allow small purchases with a Nets card no longer permitted them.
"Costs for accepting the cards have increased," said the clerk, explaining why Nets was no longer an option.
This sign is but one of a number that have started to appear in stores around Singapore. Online, too, some organisations have started to set a minimum payment amount for using Nets. After Nets fees increased last year from about 0.35 to 0.55 per cent of the transaction to about 1.5 to 1.8 per cent, merchants are finding it less attractive to accept cards for payments.
While the statistics on the number of shops that have started limiting acceptance of Nets as payment is not available, it's becoming a more common occurrence.
The vast portion of the population earning less than $30,000 a year in a country where most credit cards require a minimum annual income of $30,000 are probably the most inconvenienced if they want to make electronic payments. They may find Nets to be their only option at some retailers, despite the Competition Commission's statements that "alternative payment methods, such as credit, debit and ez-link cards, are available to consumers".
Once again, the move forward to a cashless society in Singapore has taken a step backward towards cash.
Another recent step back occurred about five years ago, when it seemed like payments would shift from cash to mobile phones.
In 2003, an Infocomm Development Authority press release said that four out of five mobile payments services being tested at the time — Blink, Gemini, Go Virtual, Telemoney and YW8 — were successful and would soon be commercialised.
Today, most of those services have gone by the wayside and only recently have mobile phone payments tests restarted after a five-year hiatus.
One other move towards a cashless society also ended recently when Citibank stopped offering its One-Touch fingerprint payments following the bankruptcy of supplier Pay-by-Touch.
While the volume of electronic payments is increasing in some selected sectors, exemplified by the 21-per-cent increase in credit card payments last year, the changes following the Nets price increase illustrate how the move towards a cashless society is not progressing as quickly as expected.
Shop at a supermarket, eat at a hawker centre or walk into a retailer, and the continuing reliance on cash is even more apparent. This was not the way it was supposed to be. Banks, Nets, EZ-link, mobile operators and other companies have worked to make payments cashless.
Unit now, Nets has been a key force behind cashless payments. With more than 5 million cards in circulation among a population of 4.6 million, Nets statement that it has "achieved ubiquity" is hardly in doubt.
Nets' rebranding exercise last year was designed to increase transactions and its pilot programme with SingTel which started in late last year was specifically intended to "speed up Singapore's move towards a cashless society," it says.
Expanded usage of ez-link cards was also supposed to help Singapore to go cashless. In August 2006, EZ-Link said that "in the near future, users will also be able to download ez-vouchers, ez-tickets, enjoy shopping, pay fines, make ez-payments for e-gaming games, music downloads and other entertainment-on-demand content all online and all through the ez-link card".
The increasing numbers of merchants that do not accept Nets, slowing development of new features by ez-link and continuing barriers to electronic payments may make the move to a cashless society fairly slow. And the barriers to moving cashless are substantial.
For one, fees are increasing. Along with the Nets fee increase that hit retailers hard, merchant fees for ever-more-common platinum cards are higher than for gold or classic cards. Higher merchant fees will only make it more difficult to convince businesses to accept cards for payments.
Another concern is the technical infrastructure. Nets, EZ-Link, Visa and MasterCard frequently use non-compatible cards or terminals. Customers may not want to carry all the different types of cards, merchants may be reluctant to clutter up counters with different devices and costs of having multiple cards or terminals can be higher than having a more limited number. Large-scale deployment of infrastructure can become more difficult.
Another barrier to going cashless would be the mindsets of the users, who prefer the feeling of greater control by using cash, the feel of cash or the anonymity of cash. Other disincentives, such as higher fees or incompatible devices, also make it harder to overcome these mindsets and will slow down change.
In a small country like Singapore, this continuing reliance on cash is surprising. Contrast it with countries such as New Zealand, where a consumer can do almost entirely without cash. Payments for taxis, morning coffee, lunch at a food court, purchases made at a newsstand, supermarkets and at most other locations can usually be made by card.
Singapore has a long way to go to get to that level of electronic payments, and recent moves may make it take even longer. Like the purchase at the bookstore, some transactions may move back from cards to cash.
It may be time for another look at what measures are needed to make a shift to a cashless society happen faster.
The writer is a consultant who has lived in Singapore since 1992. The move to a cashless society is slow going, as S'porean businesses start restricting card payments