MasterCard Study reveals Singapore is approaching cashless tipping point 

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Singapore, 1 October 2013 – MasterCard recently unveiled a new global report that revealed that Singapore is approaching the “tipping point” in becoming nearly cashless. 69% of the value of consumer spend in Singapore was made through electronic payments – higher than the global average of 66%. This puts Singapore in the top three in Asia, alongside well-known e-markets such as Korea and Japan (70% and 62% respectively). Australia topped the Asia/Pacific region, with a score of 86% indicating a “nearly cashless” market.

The Cashless Journey” report unveiled by MasterCard tracks how 33 major economies are progressing from cash-based to cashless societies. The report, produced by MasterCard Advisors, identifies new technologies, government programs and consumer preferences as key factors that are driving this shift, creating more productive and inclusive economies.

Aimed at gauging the progress made by markets in achieving the benefits that come with a more cashless economy including more convenience for consumers, better efficiencies for governments and greater financial inclusion for society, the report also provides a roadmap for how countries can reap these benefits and accelerate the Cashless Journey.

Although Japan seems to have plateaued in its progress, Korea and Singapore appear to be on track if they continue with their current cashless initiatives.

In Singapore, government regulatory support has been encouraging for MasterCard’s push towards becoming cashless. To enhance the security of electronic payment transactions, all debit, credit and ATM cards will be EMV chip-based by 2014, effectively reducing the reliance on and use of magnetic stripes on cards.

“Singapore is one of the mature markets in Asia for electronic payments and consumers here are already comfortable with using cards to make purchases. The challenge is in extending the acceptance and usage of cards in new categories that have been traditionally dominated by cash payments. To accelerate Singapore’s journey towards becoming truly cashless, understanding the benefits of speed, security and convenience of card payments for both consumers and merchants will be critical,” said Julienne Loh, general manager, Singapore, MasterCard.

“For merchants who are still handling predominantly cash today, we are open to helping them understand the cost and risks of handling cash versus accepting card payments. Efforts are ongoing and introducing Tap & Go contactless technology on cards, and even on mobile phones for everyday purchases, is just the first step towards a world beyond cash,” Loh added.

Asia/Pacific Highlights

  • Of the $63 trillion in total global consumer spend in 2011, 34 percent ($21 trillion) was done with cash, with cashless payments accounting for 66 percent ($42 trillion).
  • Australia is in the final stages of its cashless journey having moved the vast majority of the value of consumer payments to cashless methods and having removed all major roadblocks to cash conversion. A focus on innovative payment solutions including contactless solutions and new pricing schemes could accelerate the migration of low value payments to cashless.
  • Japan, Korea and Singapore are slightly less far along in their journey than Australia and are at a tipping point where the right measures can move them to the final stages of the journey. Although Japan seems to have plateaued in its progress, Korea and Singapore seem to be on track if they continue with their current cashless initiatives. To accelerate the Cashless Journey in these countries, consumer attitudes and behaviors towards cash usage need to be well understood and accommodated.
  • China, Malaysia, Taiwan and Thailand are in the middle of their transition to cashless, having created most of the requisite infrastructure to go cashless, but still with large pools of cash payments.

The fastest movement away from cash was seen in China, where cash share of the value of consumer payments is estimated to have declined by as much as 20 percent between 2009 and 2011. In China, where an estimated 55% of the value of consumer spend was cashless, the government has taken strong leadership in promoting electronic payments to support their social and economic goals.

  • India and Indonesia are just beginning their cashless journey. These countries need to continue building the infrastructure for electronic payments as well as learn from other countries as to how to accelerate their journey. Initiatives by the Indian government such as electronic disbursement of benefits and innovative mobile payment solutions in Indonesia are steps in the right direction.

Pierre Burret, Region Head, Asia/Pacific, MasterCard Advisors, concludes: “The diversity of the Asia/Pacific region is apparent in the varied progress that countries have made in their adoption of electronic payments. While countries such as Australia lead the cashless charge, others such as Japan, Korea and Singapore are on the tipping point where cashless payments may soon be ubiquitous. On the other hand, emerging markets such as China and India speak to the importance of government leadership in promoting electronic payments in order to bring more citizens into the economic mainstream ensuring financial inclusion for all.

Overall, markets in Asia/Pacific have made real progress on their journeys by establishing basic infrastructure over long periods of time. In order to ensure this journey continues, a few things are vital including the availability of affordable financial products, a vibrant and competitive merchant market place and a transparent and productive business environment.”

MasterCard Advisors’ research indicates that how ready a country is to move to a cashless society is determined by factors like the accessibility and affordability of financial services; the scale and market share of retailers; the level of technology that is available; and participation of consumers in the formal economy.

Methodology:

The “Cashless Journey” report measure nations’ progress towards more modern, efficient payment processes by looking at the current share of cash versus non-cash payments for consumers (Share), how this share has shifted in the past five years (Trajectory), and whether conditions exist for cash payments to move to electronic (Readiness).

The report measure three components of progress:

  1. Share: the percentage of the value of all consumer payments (including utility, government, medical, loan, P2P payments for goods or services as well as merchant payments at retail point of sale) that are presently done by a means other than cash
  1. Trajectory: a measure of the shift in cash share of consumer payments’ value between 2006 and 2011
  1. Readiness: a measure of the future potential for conversion of cash payments to electronic payments

 

About MasterCard

MasterCard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and

territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the discussion on the Cashless Conversations Blog and subscribe for the latest news.

About MasterCard Advisors
MasterCard Advisors, the professional services arm of MasterCard, provides clients around the world with insights and solutions that drive business impact and ROI. The company uses advanced analytics and deep payments expertise to translate data into actionable behavioral insights and customized services. With analyses based on more than 80 billion anonymous transactions processed in 210 countries worldwide, the company leverages aggregated information and a consultative approach to help financial institutions, merchants, media companies, governments and other organizations grow their businesses. For more information, go to www.mastercardadvisors.com.

Contacts:

Alina Morais, Weber Shandwick, amorais@webershandwick.com, +65 6825 8203
Lynette Lioe, Weber Shandwick, llioe@webershandwick.com, +65 6825 8006