One thing that the pandemic has shown about payments is that speed, reliability and near-universal access have never been more important. For Singapore, the first wave of non-bank financial institutions (NFIs and Fintechs), are now connected to FAST, Singapore’s real-time payment rails.
Financial tech firms believe this move signifies the growth of the local fintech industry. By giving firms access to FAST, previously the exclusive domain of banks, regulators are enabling greater competition and innovation in the payments space. Aimed ultimately to the benefit of consumers, near-universal access has never been more important in a world powered by instantaneous digital interaction.
According to them, whether it is listening to music or taking an online class, consumers are benefitting from a better experience using tech — one that is becoming faster, cheaper, more convenient and most importantly, offers a variety of choice, no matter where you are.
In contrast, they also believe that the financial services industry has largely not kept pace; while fintechs have gradually begun to fill this void by offering a variety of services that were traditionally the domain of the incumbent banks.
For the consumer, on the other hand, the benefits of this seemingly obscure change to the payments plumbing may not seem obvious. But direct participation in FAST helps non-banks level the playing field with traditional banks, increases competition and allows fintechs to offer a better, cheaper and faster service in a digital world. Beyond this, fintechs gain better control over the entire customer experience when connected directly to the national payment system, rather than having this access through a bank.
Fintechs said that this move will also curtail delays, inefficiency and high fees. A recent report from The World Bank’s Remittance Prices Worldwide showed that sending remittances costs an average of 6.75% of the amount sent — far higher than the United Nations’ goal to push this down to lower than 3%. More middlemen in the money movement process mean additional costs and delays resulting in a sub-optimal experience for the end consumer, especially for small businesses.
Financial tech firms are also looking forward to building more competitive products that make payments even faster and cheaper for citizens. They also added that for the fintech sector to thrive, policymakers need to manage risks while encouraging growth. Striking this balance between regulation and fintech innovation is not easy, especially with the rapid speed of technological change.
Accordingly, as reported by OpenGov Asia, The Monetary Authority of Singapore (MAS) pushed the commencement of the Singapore Payment Services Act (PS Act). The new PS Act will enhance the regulatory framework for payment services in the country, strengthen consumer protection and promote confidence in the use of e-payments. The PS Act adopts an activity-based licencing framework in recognition of the different kinds of activities and new developments in payment services.
Just recently, as also reported by OpenGov Asia, Enterprise Singapore (ESG), Infocomm Media Development Authority (IMDA) and the SG Digital Office (SDO) announced that 10,000 stallholders – more than half of Singapore’s stallholders – have adopted e-payments. 10,000 hawkers using e-payments, with transactions growing four times since June 2020. Transactions volume and value for January 2021 also crossed the 1.2 million and S$14 million mark respectively for the first time.
As one of the centres of innovation in the world, Singapore is well-placed to foster a more open and transparent payment ecosystem that benefits consumers. The country aims to lead the charge in encouraging constructive competition and closer collaboration in the sector.
