The platform will be able to accept payments from customers using the various banks’ payment apps.
The move of Singapore's three largest banks to join the Network for Electronic Transfers (Singapore) Pte Ltd (NETS) Quick Response (QR) code platform advances the payments system in Singapore, Moody's revealed.
According to a review, the move is credit positive for the three banks. The facilitation of e-payment channels also allows the banks to fill in the gap in their services that fintech firms might exploit.
Moody's compared the situation to China's, where e-payments have grown strongly, but banks have not benefitted.
Moody's associate analyst Komaresan Subramanian commented, "A unified QR code platform will be able to accept payments from customers using the various banks’ payment apps, which will ultimately improve interoperability and facilitate a switch to cashless solutions."
DBS, OCBC, and UOB all have QR-based payment systems, but they have not gained wide acceptance given the variance in QR code standards.
The participation of foreign bank subsidiaries, which held close to 40% of domestic deposits at 30 September 2017, in the NETS QR initiative increases the likelihood of Singaporean customers’ acceptance and will promote positive network effects.
Through this partnership, the number of NETS QR acceptance points will triple to around 100,000 by year-end 2018 from the current 30,000, increasing the number of QR acceptance points for the three banks.
Here's more from Moody's:
A movement to a QR-based system will ultimately allow consumers to scan a QR code and make payments directly to smaller retail enterprises that traditionally transact with small ticket cash amounts without merchants having to put in place costly debit acceptance terminals.
NETS and the three banks are also offering rebates and fee waivers to smaller retail enterprises that traditionally transact with small ticket cash amounts to adopt the QR initiative.
Enrolling smaller retail enterprises would create a sea change in customer payment patterns: according to an August 2016 Monetary Authority of Singapore-commissioned KPMG study of Singapore’s payment ecosystem, around 60% of consumers pay in cash, with a large majority of such cash payments taking place with smaller retail enterprises.
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