SINGAPORE: Plans to open up the Fast and Secure Transfers (FAST) transaction system in Singapore have been welcomed by industry experts and financial technology (fintech) players, who said that it will pave the way for greater convenience and more innovative e-payment services for consumers while lending a helping hand to Singapore’s cashless push.
Education Minister Ong Ye Kung on Monday (Sep 17) said that non-bank players will soon get direct access to FAST – the inter-bank instant electronic funds transfer system launched in 2014 and which peer-to-peer service PayNow is built upon – so that their e-wallets can inter-operate with bank accounts.
Simply put, this means customers can soon make instant top-ups, or refunds, from different types of e-wallets to any bank account.
Beyond that, Mr Ong said that allowing open access to a common infrastructure like FAST will hopefully create value-added services as players compete.
Those that Channel NewsAsia spoke to backed the announcement, with some describing it as an “important” milestone that will put Singapore on the global map.
While similar initiatives are underway in countries like the United Kingdom, the opening up of FAST will still make it one of the first global payment platforms to allow inter-operability between financial services firms beyond traditional banks, said IDC Singapore’s senior research manager Michael Yeo.
For consumers, they can expect greater ease of use and eventually, more choices as fintech firms start using and embedding their products and services within FAST, he added.
Specifically, consumers can look forward to more differentiated e-payment services, said Mr Jeremy Tan, founder and CEO of home-grown payments technology company Liquid Group.
“While banks serve hundreds and thousands of customers at one go, the fintech players are more likely to look at niche areas, which will create many more different ways of payment services.”
Meanwhile, having a direct link to bank accounts can help to speed up the process of topping up e-wallets as users will no longer need to do “the extra step” of using methods like credit cards. “I think this will only help to drive e-payment adoption in Singapore,” added Mr Tan.
With that, Liquid Group has signed up to be part of the industry working group that will iron out the necessary business and technical requirements for non-banks to connect directly to FAST.
Remittance services company TransferWise, mobile payments technology player MatchMove, gaming firm Razer and ride-hailing giant Grab are among the others that have submitted their names.
UK-based TransferWise said it can contribute lessons learnt given that it was the first non-bank company to be given access to Britain’s Faster Payments Scheme earlier this year.
“It will be crucial to ensure that the costs of joining, both technical and financial, are as low as possible, otherwise this valuable initiative will not achieve its intended aims,” said its head of banking Lukas May.
Others think that the industry working group will have to address issues ranging from system compatibility to security and compliance.
“The ultimate goal of the working group is to balance open accessibility with stability and security of access, as well as efficient capital deployment for long-term sustainability and competitiveness of the scheme,” said Matchmove’s senior vice president Ashley Koh.
For Mr Shirish Jain, director at PwC’s “Strategy&” office, it is about striking a balance between convenience and the resilience of FAST.
“From a working group perspective, it should be about how to strengthen FAST and ensure that it lowers barriers to entry, adequately defines the security of the entry points, and prevents propagation of any issues beyond that participant.”
SINGAPORE’S RACE TO GO CASHLESS
While Singapore’s push towards a cashless society seems to have garnered more importance in recent years as part of the Smart Nation umbrella, the country’s e-payments journey started relatively early with the Interbank Giro system in 1984.
That was followed by the introduction of the NETS service two years later, which allowed consumers to use ATM cards that are linked to their bank accounts to pay merchants.
After a string of initiatives to bring e-payments to the local public transport system, recent measures have zeroed in on bringing greater convenience to consumers and businesses, as well as improving inter-operability.
These include the introduction of FAST in 2014 and the PayNow transfer service last year. For the latter, 1.2 million mobile numbers and 550,000 NRIC numbers have since been linked to bank accounts, with about S$1.5 billion transferred via PayNow thus far.
Last month, PayNow was extended to businesses with the aim of reducing cash and cheque handling.
More than a million people in Singapore are using PayNow since it was first launched in 2017, said The Association of Banks in Singapore.
In another move to unite the fragmented e-payment space here, the Singapore Quick Response Code (SGQR) – a single QR code that is compatible with as many as 27 e-payment solutions – was launched on Monday.
Describing the unified payment QR code as a “very important foundation step”, Mr Jain said: “It makes retail payments simpler, helps address clutter and confusion for consumer and merchant.”
He added: “Just like how PayNow simplified remittances using phone number, SGQR should also help further increase innovation in this space.”
Echoing that, IDC Singapore’s Mr Yeo said that while consumers will still have to check if their preferred payment scheme is accepted by the merchant, having a single QR code sticker is still a “massive improvement” from the current situation of having multiple QR codes on display by some merchants.
The SGQR code displayed at a Toastbox outlet at the 100AM mall. (Photo: Tang See Kit)
Overall, experts reckon that Singapore is making “positive steps” towards its goal of a cashless society though issues remain.
For one, there is still the “perceived convenience, affordability and ubiquity of cash” within some segments of the society, said Mr Jain.
More also needs to be done in the areas of increasing merchant acceptance and driving consumer adoption, while ensuring security issues can be handled adequately, added Mr Yeo.
On that, Mr Ong said in his speech on Monday that regulations will be the “last piece of the e-payments jigsaw” for the Government.
“All these efforts will come to naught if people do not feel safe using e-payments,” the minister said at the launch of the SGQR.
Upcoming steps will include having financial institutions to put in place “robust” cyber defences so that customers can have confidence in carrying out online financial transactions, while the MAS will issue a set of user protection guidelines for e-payments by the end of this month.
