E-payments has seen a steady rise in S’pore: will cashless ever replace cash for good?

Cash has been dethroned and is no longer king, and payment companies like JCB have been at the forefront of this development in its Japan home market and hopes to bring its strengths to the ASEAN region. Over the past few years we have seen a huge increase in the use of e-payments and Singapore has been leading the way making remarkable developments in financial technology.

Be it in debit cards, credit cards, and even mobile payments, we see growth in the fintech space coming from financial services firms like Singapore’s tech giant Grab as well as payment companies like DBS, Maybank, and JCB. 

The growth of the e-payments scene in Singapore has even spawned SingSaver, a publication dedicated to comparing credit cards and other credit card promotions among other e-payment options. 

So why do we have e-payments and how did such services come to replace cash? More importantly, what does the future of e-payments in Singapore have in store for us?

Singapore’s payments scene

E-payment services are now commonplace in Singapore, but this was not always the case. It began with the introduction of GIRO in Singapore in the 1980s, and was followed soon after by banks issuing debit and credit cards.

Today, major banks offer credit cards with payment gateways Visa, Mastercard, as a form of e-payment. The e-payments scene has grown in sophistication. We now also tap on e-payment services to pay for public transport using our EZ-link cards, settle restaurant bills with our credit cards, and withdraw cash from ATMs with debit cards.

The e-payments technology has moved beyond just credit and debit cards. Where we once had to carry a wallet for cash and cards, now, our phones function as our wallets as well. We rely on financial services firms like Paypal for online shopping, GrabPay for private transport, FavePay for food.

The story behind the rise in e-payments

Centuries ago, when paper money replaced gold coins as a preferred form of payments, one of the major reasons was convenience – gold is heavy and cumbersome, and is difficult to transport in large quantities. The same is true for the digitalisation of money today. 

Cash has a tendency to be cumbersome, especially now when cards have multiple functions and phones offer payment apps and the storing of e-cards. 

In addition, the pandemic has only helped the transition of Singapore into a cashless society. Concerns about keeping everything as contactless as possible led to widespread adoption of cashless payments, and consumers began to shop online instead of in physical stores. Companies also began to move online, and many found success with this new strategy.

A bank card can contain as much money as you need it to, and is essentially a “wallet” that is linked to a bank account. It is also troublesome to carry so many cards, as a phone can also function as a card and “store” multiple cards too.

Another key advantage of e-payments as compared to cash is security. Cards can be cancelled, phones can be locked, but cash cannot be retrieved by an individual if they lose their wallet. Losing a wallet containing a significant amount of cash could be disastrous, but losing a phone or a card would have no such effect if one acts fast enough.

Security and convenience are thus the main drivers of payment digitalisation, and it doesn’t look like it’s just a temporary fad. E-payments offer real benefits for its users, and these benefits are significant for many.

JCB’s keen expansion into Singapore and Southeast Asia 

Founded in 1961, JCB is a private company based in Japan that issues credit cards and related financial services. The company has been a pioneer in introducing credit cards as a payment method in Japan and beyond its home country.

Today, the company has expanded internationally, and is the only company in Japan to operate an international card brand. It has also developed a variety of businesses on the global stage.

In addition to developing a network of merchants that accepts JCB cards globally, the company is expanding the issuance of JCB cards, with a keen eye to expand massively in Southeast Asia. Currently, JCB cards are used by more than 140 million members, mainly in the Asian region.

In fact, JCB has already begun moving into Southeast Asia. Created in 2021, the ASEAN Business Enhancement and Creation Department has been in charge of JCB’s business expansion in Southeast Asia, focusing on accelerating the development of new payment services through strategic partnerships with local financial institutions and start-ups. The new department is based in Singapore, the city known as the business hub in Asian financial industry with fruitful opportunities to make new alliances with potential partners.

JCB recently announced a new strategic partnership with Soft Space, a Malaysian fintech company. The partnership aims to harness synergies between the two companies. 

For JCB, this partnership means an expansion of its merchant network through Soft Space’s Tap on Mobile technology which allows a merchant to accept JCB cards using the merchant’s mobile device, new virtual card issuing solutions, as well as the provision of customer marketing solutions and related data analytical tools. This would allow JCB to take advantage of Soft Space’s payment tools and marketing platform, and tailor their strategies to suit customer preferences, as well as offer omnichannel payments for their customers.

Why Singapore and Southeast Asia? 

According to JCB, Southeast Asia is a high potential market with growing populations and growing economies. This means that there’s potential for high returns in the long run. 

In Southeast Asia, there are still a large group of unbanked users and many people still do not have credit cards. Vietnam, Philippines, and Indonesia are among the top 10 unbanked countries in the world, with at least half of the population in each of these countries not owning a bank account.

The relationship Japanese firms have with Southeast Asia has been long and the foundation of trust has already been created long ago. Japan has been heavily involved in investing in Southeast Asia since the 1970s, and several major companies have backed the economic development of countries regionally.

JCB also believes that the people of ASEAN have a positive view of Japan and are assured that JCB can provide value. 

Recognising the growth potential of Southeast Asia, JCB is doubling down on its regional efforts, and is looking to expand its businesses here. JCB will be expanding its collaboration with external parties in the region, while simultaneously pursuing strategies to create new businesses in the medium to long term.

More offerings set to come from JCB

As a challenger to the status quo in the ASEAN market, JCB may have some work cut out for it in terms of catching up to the larger players’ market shares.

But being a newer player, it has the advantage of being nimble and adaptable to listen to the market’s needs. For instance, companies like Visa and Mastercard have tried out in Southeast Asia and tested what works and what does not, and the lessons gained from these companies can be taken by JCB in the development of new products and offerings. 

Right now, JCB is expanding its outreach to let more customers know about it in South-east Asia, through brand marketing as well as collaborations with companies like soCash and SoftSpace.

As for future plans, it’s working on providing new value and solutions to users and will do so through using its high penetration rate of smartphones to promote JCB’s products and gain new customers.

If past success is anything to go by, JCB is poised to grow significantly – they have a strategy for market penetration, and with Soft Space backing them with new technological tools and platforms, it seems like it’s got its bases covered. As consumers, we can look forward to seeing what JCB has in store for us and be ready to snap up the good offers it will offer in a bid to bring in customers.

This article was written in collaboration with JCB.

Featured Image Credit: Inside Small Business