Cash is still king in Singapore as reluctant elders shun mobile apps

Security concerns in mobile banking apps rose from 34% in 2017 to 41% in 2018.

Even with the government throwing its full weight in support of Singapore’s cashless ambitions, a number of sectors and demographics remain hesitant to adopt mobile payment alternatives as they still find comfort in hard, cold cash.

Cash and cheques account for roughly 40% of payments in Singapore which highlights the risk to the government’s cheque-free target by 2025, a report from S&P show. Cash in circulation also represents around 10% of Singapore’s GDP compared to about 2% in global cashless leader Sweden, signaling the uphill battle in denting the dominance of cash especially amongst the more reluctant sectors like hawker centres, food courts and wet markets where small-ticket transactions often take place. Enterprise Singapore CEO Ted Tan earlier estimated that around 40% of dining occasions occur at hawker centres, canteens and coffee shops.

“We believe the transition to a cashless society will be a gradual one given the ageing demographics in Singapore. On a behavioural basis, the older population segment is more resistant to change and will likely prefer traditional or bricks-and-mortar banking,” Ivan Tan, analyst at S&P Global Ratings told Asian Banking & Finance.

The preference for cash is not only exclusive to Singapore’s reluctant senior citizens, however, as 88% still prefer to withdraw cash in ATMs in 2018, according to an annual survey from J.D. Power, which observed that the reliance on cash spans across different age brackets.

Security concerns when using mobile banking apps have also grown to 41% in 2018 from 34% in the previous year across Gen Y, Gen X and Baby Boomers, noted Anthony Chiam, Regional Practice Leader, Global Business Intelligence - Asia & Australia at J.D. Power.

Moreover, the availability of digital alternatives is also unlikely to automatically change consumer attitudes. If anything, the availability of multiple mobile payment options like NETSPay, DBS PayLah, GrabPay and Alipay only serves to confuse and possibly discourage consumers from going cashless and causes more pain for merchants that have to maintain multiple terminals and apps to cover all their bases.

Although the government has rolled out the Singapore Quick Response Code (SGQR) in September 2018 to combine multiple payment QR codes into a single SGQR label, Chiam suggests that authorities could do more and cull the number of available options to surface the best possible payment alternatives. “Singapore could introduce stricter barriers to entry so that the mobile wallets on offer are in the best interest of the customers and are secure and of the highest quality,” he proposed.

Also read: Unified QR code boosts Singapore banks' cashless agendas

The government could also look into the possibility of setting up a common platform like Thailand’s PromptPay to solve interoperability issues and drive islandwide adoption, suggested Tan of S&P.

“[T]he government can change the regulatory and legislation frameworks to provide an increased focus on consumer security and innovation in the field as well as encouraging banks and businesses to go cashless at a corporate level,” added Chiam.

However, Chiam argues that the burden on fostering e-payments is not solely a government duty as retailers could also pitch in by incentivising mobile wallet usage through discounts and cashback to effectively foster customer loyalty starting with small purchases. “It is all about value adding and improving a customer’s experience and the key to do that is also the most fundamental – it is to provide a high-quality, secure service that improves a customer’s banking journey every step along the way and not just focuses on preaching to the converted and replacing one banking channel with another."

Photo from DBS