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Combining Tradition and Technology for Sustainability in Singapore

This image shows a HDB housing complex in Singapore

E-payment has been gaining steam in Singapore with the proliferation of services. The COVID-19 pandemic has only accelerated the growth of this form of payment as businesses and banks encouraged consumers to switch to e-payment for contactless transactions. Given the ubiquity of a smartphone, most of us should be no stranger to e-payment services, and many might even be avid users of such services.

The Monetary Authority of Singapore has been encouraging the gifting of used notes or switching to e-hongbaos The reasons are twofold: to support sustainability and to prevent overcrowding in banks during the pandemic. While some people can understand the rationale of not visiting a crowded bank branch amid a pandemic, switching to e-hongbaos in the name of sustainability may be hard for some to justify in abandoning the cultural tradition.

While the current practice of gifting hongbaos (red envelope) is part of the tradition, the sustainability imperative should not be neglected. Most of the red packets will most likely end up in the incinerator because these tend not to be easily recyclable due to their designs and materials.

It is not just the red packets. The new notes that we painstakingly queue for, will only be used momentarily, after which they will become used notes that are deposited back to the banks at the end of the festive season. If the public continues to demand only new notes each Lunar New Year, the used notes have no opportunity to be recirculated.

In Singapore, as many as 100 million pieces of new notes are issued to meet the festive demand annually. The $2 denomination forms the bulk of new notes issued. Some of the used $2 notes that are deposited are reissued as good-as-new notes the following Lunar New Year. This recycling of used notes has helped to meet about 20 per cent of annual festive demand, reduced wastage and supported the environment.

Sustainability is not the only reason why people should be persuaded to give e-hongbaos a chance. The practical cost of printing paper currency is a key consideration too. Using available estimates, the U.S. Department of the Treasury’s Bureau of Engraving and Printing announced its 2021 currency operating budget to be US$1.1 billion. The cost of printing a U.S. one-dollar note is about 6.2 cents per note. This is just over 6% of the note’s monetary value.

Gifting of e-hongbaos is on the rise in Singapore. In 2021, a bank reported more than 32,000 QR Gift transactions through an app totalling $2 million, as compared to 18,000 totalling $660,000 in 2020 over the first two days of the Lunar New Year. Other banks also saw an upward trend in the transaction. Another bank had three times the increase in e-hongbao transactions.

E-hongbao is convenient as one does not need to visit the bank to queue up for new notes, or to deposit the money received after the festive season. A few clicks are all that is needed to give and receive. One also does not need to worry about misplacing the hongbaos.

As reported by OpenGov Asia, in addressing the digital economy in the country, Singapore will next link its national real-time payment system to Malaysia’s equivalent E-payment infrastructure, just weeks after announcing similar plans with India. The most recent collaboration will allow residents of the two neighbouring countries to transfer funds using their mobile phone numbers.

In addressing the digital economy in the country, Singapore will next link its national real-time payment system to Malaysia’s equivalent E-payment infrastructure, just weeks after announcing similar plans with India. The most recent collaboration will allow residents of the two neighbouring countries to transfer funds using their mobile phone numbers.

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