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The future of payments is inclusive and invisible

CASH might not yet be extinct - but the world of payments has transmogrified, at least in the last five years, evolving quicker than ever, into the digital and mobile.

What will the future of payments look like? It will be, to put it in two words, inclusive and invisible.

Payments will be inclusive in that they will always be the critical last step of any transaction, whether it is ordering dinner via a food-delivery app or buying a PlayStation through an e-commerce website. Payments will also be invisible, or so seamless that consumers will never feel like they are making any effort at all when paying for something.

In this faraway future of payments, QR (Quick Response) code payments will continue to play a significant role. While they will not be the only mode of payment available, they will be one of the mainstream ones. There are three reasons for their prevalence: productivity, cost effectiveness, and the development of mobile wallets. (The number of mobile wallet operators has also risen.)

Firstly, QR code payments are productive as they are extremely easy to set up and operationalise, and hence bring relatively far wider benefits. In a retail shop, for example, all it takes to facilitate a QR code payment is a 20mm by 20mm QR code label, and for a consumer to use his mobile phone and scan that label to make a payment: a quick and intuitive process.

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On the other hand, traditional payment methods such as credit cards and cash usually require a clunky physical terminal or register, and more cashiering labour, rendering them comparably less productive.

Secondly, QR code payments are inexpensive to implement. In Singapore, a QR code label costs about 20 Singapore cents; a credit card terminal, on the other hand, can set a merchant back by at least S$270. This represents more than a 100 times savings in cost!

QR code payments also charge a substantially lower processing fee - about one per cent of each transaction, sometimes less - than credit cards, which typically charge merchants about two to three per cent for every transaction. By using QR code payments, merchants save on processing fees and therefore earn more.

The cost effectiveness of QR code payments is perhaps best exemplified in India. While it took decades for Indian merchants to embrace credit cards and amass a million credit card acceptance points to-date, it took them only two years to embrace QR code payments and amass a million QR code acceptance points.

Thirdly, with the rapid evolution of mobile wallets, the potential of QR code payments will only grow. Mobile wallets are increasingly becoming the one-stop digital tool for users to access multiple types of financial services, ranging from payments and remittance to peer-to-peer fund transfer and bill splitting.

In short, mobile wallets are going to offer a wider variety of use cases than say, credit cards or bank accounts, will ever do. A mobile wallet is increasingly seen as a facility that connects a consumer to a smorgasbord of services. For that reason, mobile wallets - and by extension, QR code payments - are here to stay.

In Singapore, one can easily see this happening. In only the last three years, nearly 30 mobile wallets have emerged, with most of them featuring QR code payments and all vying for a piece of the Republic's growing and lucrative payments market. These include NETSPay, DBS PayLah!, GrabPay and Singtel Dash.

It is crystal clear that the wallet operators are a mix of incumbents in the finance industry as well as up-and-coming fintech startups. This is an extremely interesting development, which suggests that the overall trajectory for mobile payments is rising, and on that account, everybody wants in.


Notably, for non-financial players such as a leading ride-hailing platform provider (which, at present, charges zero QR code payment processing fee to its merchants), mobile payments may not make them money for a long time, during which they will only be burning cash. Why then do such players continue to invest significantly in mobile wallets?

Simply put, they cannot afford not to! Payments will always be the last critical piece of action that completes the transaction journey for the consumer. Thus, if a player does not build its own mobile wallet, it will have to use a third-party's mobile wallet and fail to be the owner of its full, unique ecosystem.

For financial players such as banks and even telecommunication companies, mobile payments may not be a realm they would like to venture into, for reasons such as low profitability. However, mobile payments have become an area that incumbents cannot dismiss, in light of Singapore's cashless aspirations.

In September 2018, the Republic launched SGQR, a common QR code standard that lets merchants display just one QR code label and accept payments from a suite of mobile wallets. With SGQR, Singapore became the first country in the world to have a government initiative and regulate a nationwide, interoperable QR code system.

Even so, the country has many ways to grow in terms of mobile payment acceptance. To encourage adoption of e-payments, the government can lead mass education efforts to inculcate in both the young and old in Singapore the benefits, security and convenience of mobile wallets.

Mobile wallet operators can also do their part by launching attractive marketing campaigns to educate users and give them reason to make mobile wallets an integral part of their daily lives.

Finally, a higher-level solution is for QR code payment-solution providers such as FOMO Pay to develop cross-border interoperability between QR code standards. Imagine this: a Singaporean will one day be able to pay - by using his local mobile wallet, say, NETSPay - for sheng jian bao (pan-fried pork bun) in China!

When that day comes, consumers will be able to use any mobile wallet anywhere in the world, and the world will be a step closer towards a future where payments are inclusive and invisible.

  • The writer is co-founder of FOMO Pay, a Singapore-based QR code payment solution provider and a founding member on the Monetary Authority of Singapore (MAS) SGQR Taskforce, set up to develop Singapore's first common QR code standard, which was launched last September.

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