Singapore’s younger generations of consumers are leading the shift to digital payments while more than half of small businesses in the country do not currently provide cash payment options, according to a recent report.
There is a growing trend towards digital payments in Singapore, driven by strong government support and initiatives aimed at building a digitally connected society, finds small business platform Xero’s I Want to Pay that Way report, which delves into changing payment habits among consumers and how small businesses are adapting.
Currently, over three-quarters of Singapore consumers (76%), the report reveals, use credit or debit cards for payments, and more than half of the population uses funds transfer service PayNow (55%) or bank transfers (55%). About a fifth are also using e-wallet service GrabPay (22%) and buy now, pay later platforms (21%).
Reflecting changing perspectives, 30% of Singapore consumers, the research shows, only carry their mobile phones to pay when shopping, notably higher than the global average of 21%.
Younger generations are leading the way, the report reveals, quickly embracing new digital payment methods. PayNow is the preferred digital payment method for 68% of Gen Z consumers in Singapore, with about a third (29%) also using GrabPay.
Failing to meet consumer payment preferences, the report highlights, can directly impact customer retention and revenue. Approximately 18% of Singapore consumers indicate they would visit another business that accepts more payment options if a business didn’t offer at least one of their preferred payment methods.
Despite trends indicating a shift towards a cashless society, physical currency remains a preferred payment method for a significant portion of Singapore’s population. Nearly eight in 10 (79%) Singapore consumers use it for transactions, highlighting its prevalence in everyday life.
However, half (51%) of local small businesses no longer offer it as a payment option, making small businesses in Singapore the least likely among the countries surveyed to accept cash payments, despite having the highest proportion of consumers who opt for this traditional method.
New payment method benefits
Nearly nine in 10 (87%) small businesses in Singapore say they have benefited from adopting new payment methods in the last six to 12 months, with key reported advantages, including reduced time to be paid (43%), retaining more business (42%) and increased sales (41%).
Many small businesses in Singapore, the report finds, are optimistic about future or emerging payment methods. These include biometric authentication methods like fingerprints or facial scanning (36%), bartering marketplaces/apps (33%) and augmented reality (33%). About a third (31%) have expressed excitement about implantable payment chips, a much higher figure than small businesses in countries like Australia (7%) and New Zealand (9%) included in the research.
“Singapore is at the forefront of building a robust digital payment landscape, aligning with its broader digital economy and Smart Nation goals,” states Koren Wines, Xero’s managing director for Asia. “While a supportive regulatory environment and complementary initiatives are driving digital payment development and adoption among Singapore’s small businesses and consumers, targeted support to help small businesses adopt more payment options will also be crucial.”