Singapore Pushes to be Asia’s Hub for Financial Technology with Cashless Payment System

shutterstock_22281850Singapore is encouraging its banks to switch to electronic payments. Beginning next year, the country wants to replace cash and checks with a digital payment system. Why? In 2014, Singaporeans used an average of 12.7 checks per person, which cost the country roughly $2 billion per year to store and process them.

“For consumers, the use of cash for daily payments is high,” Ravi Menon, Managing Director for the Monetary Authority of Singapore (MAS), said at the Kim See Boon Institute Conference on FinTech and Financial Inclusion on Friday. “For businesses, the use of checks is relatively high too.”

The MAS hopes to emulate Sweden’s economy where citizens rarely write checks. Singapore intends to minimize paper-intensive services throughout its banking system by having the country’s banks relay the added processing costs to its customers. Switching to digital payments means that banking transactions will be made using a national ID, cellphones and other secure numbers as opposed to bank account numbers. It’s likely that these changes will be implemented over the next year.

Countries with a high use of cellphones and banking services are primed for using digital payments. According to Citigroup Inc., Singapore, Finland, the U.S., Sweden and the U.K. are most ready for these changes.

A cashless payment system is already on its way. Apple Inc.’s mobile payment service, Apple Pay, launched in Singapore in April 2016. Shortly after, Samsung Electronics Singapore unveiled Samsung Pay, allowing users to use their Samsung smartphones for any debit and credit card payments Singapore launched Samsung Pay before all other Southeast Asian Markets.

“We are extremely excited that Samsung Pay is now available in Singapore. As the first market in Southeast Asia to roll out our mobile payment service, Singapore will pave the way for the region’s adoption of Samsung Pay,” said Stephen Suh, President, Samsung Electronics Singapore.

As Singapore continues to adopt digital payments throughout its economy, it hopes to become an Asian hub for financial technology. In addition to curbing the cost of storing and processing checks, Singapore anticipates digital payment systems to create more jobs. In doing so, it will further establish the country’s reputation as a regional banking center.