How Consumers and Businesses Make Payments

Currently, cashless mobile payment has caught the attention of governments and unrelated businesses. During its National Day Rally in August, the Singapore Government posited China as a role model for creating a fluid smartphone e-payments ecosystem. It was easy to see why – China managed to see various e-payment methods take of without massive participation from their authorities. This prompted Singaporean CEO of Razer, Tan Min-Liang, to draft a proposal for a nationwide e-payment solution.

Ironically enough, the proposal threw the ball back into the Singapore Government’s court – by stating that the Monetary Authority of Singapore (MAS) should look into a common e-payment framework that’s neutrally managed by the authorities.

It’s quite plain to see that Singapore isn’t quite ready for the new age of e-payments, but we’re getting there. Now, there’s PayNow, where citizens of Singapore merely need the mobile or NRIC identification number of their peers to transfer cash between friends at no extra charge.

Where the money’s at

So why is there a push for more convenient e-payment options when the existing ones are sufficient and entrenched into our lifestyle? To understand that, we have to think outside of our regional borders.

Earlier in August this year, Alipay announced that they chose to partner with a relatively new and unknown n-tech service provider in Singapore called CCPay. This collaboration will increase the number of Alipay-ready terminals around famous tourist traps, such as Chinatown and People’s Park Complex. It provides more convenience to expat Chinese workers residing here as well, since they can spend directly from their homeland’s bank accounts, on top of automatic currency conversion services whenever you make a payment via Alipay in Singapore.

While it may seem unrelatable to residents within the SEA region, making Singapore a prominent venue for Chinese tourists to spend cashlessly at is a strategic move to generate more revenue for local businesses. The country is in a competitive landscape where her neighbors can oZer cheaper shopping with a broader variety of goods and services.

The Singapore Tourism Board stated that 2016 saw a total of 2.86 million visitors from China – it would be silly to not ‘help’ these people spend their money since Alipay saw US$1.7 trillion (~S$2.29 trillion) transacted via the service in just 2016 alone.

In the case of Alipay and CCPay’s partnership, the local startup will help the Chinese rm handle all Alipay transactions in Singapore. In return, CCPay gets to charge a service fee, and Alipay can get a cut from it. All costs – such as currency conversion – are borne by the shoppers. It’s an orderly arrangement for Singapore, who didn’t have to lift a nger to be a part of this scheme.

That’s not to say that SEA is idle in the cashless landscape – across the Causeway, we have WeChat Pay working on crossborder licensing, which would allow Tencent’s e-payments

system to operate seamlessly in Malaysia. WeChat already has that license and a non-Chinese Yuan app in Hong Kong. Tencent said that WeChat Pay could also be found in 13 markets outside of China, with 10 currencies supported.

Together with Alipay, these two Chinese e-payment rms see CNY18.8 trillion (S$3.826 trillion) worth of transactions in just the rst three months of 2017. With that, it’s immediately apparent why mobile e-payments is a must for Southeast Asia – almost nobody says no to more money.

But is it really safe?

With all the benefits we’ve presented thus far, you must be wondering: What’s the catch? Well, how about the obvious concerns about safety to start? Everybody we’ve spoken to for this story from service providers (like Grab and Liquidpay) to the banks (like DBS) to even Government authorities (like MAS) has reiterated that mobile payments are safe - safer than credit cards or even cash in fact. They point to how access to the app is secured behind your mobile phone’s security, whether it be biometric or a six digit pin, and say that there is always recourse for action as mobile payments are consider direct funds transfers and so are safeguarded by the same laws.

The advice given from The Association of Banks in Singapore (ABS) is to contact the person to request he send it back to you as it was sent in error and to remind him that using money that does not belong to him is a criminal offence under the Penal code (in Singapore). Presumably, that gives you room for legal recourse - at least, if you’re in Singapore.

But somehow, that still isn’t the most reassuring answer. After all, Salvador Mendoza already demonstrated a number of attacks targeting Samsung Pay at Defcon last year, and the hackers of Germany’s Chaos Computer Club demonstrated in 2013 that even Apple’s vaunted Touch ID can be hacked if people with enough intent put their minds to it.

In Singapore, there’s been a case of a consumer who had his credit card details stolen from his smartphone. Six ight tickets worth a total of $12,327 were purchased, and yet his bank is refusing to waive the charges and insisting he pay a lowered sum of $5,000 as they claim their security system was never compromised. Obviously the hackers managed to obtain the two-factor authentication codes somehow, but this just goes to show that all of us need to be vigilant with every transaction.

The low threshold set for mobile payments may also work in favor of the perpetrators as multiple small transactions are definitely harder to track than single large ones.

Given how attached we are to our smartphones these days, it’s easy to see someone waiting at least half a day to see if it isn’t picked up. In that time, multiple quick transactions could be made - picking up ve Apple Store gift cards from a convenience store and then running over to the next one for example - before the thief disposes of the phone. As long as you have access to the mobile phone and the payment solution, no one thinks twice. That’s the beauty and the danger of mobile payment.

Until the day we can truly secure our smartphones (or deactivate them instantly without remorse), we’d say the best way to pay is simply to continue to have multiple ways. Governments and retailers will just have to accomodate.