Commentary
FINANCIAL SERVICES | Satish Bakhda, Singapore
view(s)
Satish Bakhda

Payment options for e-commerce businesses in Singapore

BY SATISH BAKHDA

Singapore’s e-commerce market is slowly positioning itself as a key player in the country’s retail industry. E-commerce is expected to make up 6.7 per cent of all retail sales in the city-state come 2025, triple that of the 2.1 per cent figure in 2015. The net worth of the e-commerce industry was estimated to reach more than US$5.4 billion (S$7.46 billion) in the next seven years, according to a 2017 financial report by Google and investment firm Temasek Holdings.
 
If you are interested in getting a slice of Singapore’s vibrant e-commerce pie, an essential factor you have to consider before setting up your e-commerce business is your choice of payment option or payment gateway. Knowing how to choose a suitable payment gateway to integrate into your website is necessary for your business operations. Moreover, it is important to understand what a payment gateway is and how crucial it is to your site’s payment process.
 
What is a payment gateway?
A payment gateway is an e-commerce service that processes the credit or debit card payments that customers make when they purchase items online. It is responsible for authorising and facilitating the payment transaction through the transfer of credit or debit information between an online store and the acquiring bank. 
 
A payment gateway’s role in the payment process is important to ensure the transaction is authentic and secure from possible fraud before an online payment can be finalized. The 1997 financial crisis in the Southeast Asian region created widespread consumer mistrust for B2C online payment transactions due to the prevalence of online fraud and data compromise issues. Payment gateways served as essential tools in the re-establishment of e-commerce business operations in the region and the gradual elimination of consumer mistrust and reluctance.
 
Factors to consider when choosing a payment gateway
There are specific factors you have to consider when choosing a payment gateway. The three most crucial ones are listed below:
 
1. Transaction fees
Every time a payment gateway processes a payment transaction on your site, its service provider demands a fee from you in exchange for allowing you to use their application. Most payment gateway service providers in Singapore charge based on a fixed percentage and a flat fee rate per successful transaction. There can also be other service charges such as set-up, monthly, and annual fees. Set-up fees are usually charged as one-time payments while monthly and annual fees are only incurred when you avail of their subscription plans. Some service providers estimate fees based on your monthly sales volume (e.g., PayPal and Stripe). You should determine which fees are the most cost-effective for your enterprise before you decide which payment gateway to use.
 
2. Accepted Payment Methods
Accepting payment online is an integral part of your business. You need to examine the online payment methods that your target audience prefers. Unsurprisingly, credit cards dominate in this aspect at 74%, with Visa having the majority share at 57.2%. But a considerable number of customers choose alternative payment methods, such as direct debit, bank transfer, and cash-on-delivery. If you also want to cater to their needs to increase sales, you would need a payment gateway that supports these payment methods.
 
3. Ease of Technical Integration and User Experience
The amount of time it takes for a payment gateway to be wholly integrated on your website largely depends on the degree of user experience and customisation that you anticipate it to provide. It is important to test its technical integration vigorously to avoid unnecessary payment problems that may cause your customers to cancel the transactions they intend to make. You can choose between a hosted payment gateway and an integrated payment gateway.
 
A hosted payment gateway redirects your customers from your checkout page to the website platform of your selected payment processor (e.g., PayPal) where they provide their credit card information and confirm their transaction. An integrated payment gateway, on the other hand, connects to your website through its application program interface (API), so customers do not need to leave your site to make payments.
 
A hosted payment gateway is ideal for new e-commerce businesses because it is easier to set-up and the service provider will be the one responsible for meeting all data security requirements and legal compliance methods. But unlike an integrated payment gateway, it offers limited customisation options. This may come as an issue to you especially when you make updates on your website’s UI/UX design.
 
Four payment gateways in Singapore to choose from
 
PayPal Express Checkout
Besides its international online payments service, PayPal also offers a hosted payment gateway called PayPal Express Checkout.
 
Transaction Fees
-Transaction fees are based on a fixed percentage and a flat fee rate per transaction (3.9% on total sales amount + $0.50 fixed transaction fee) but you can apply for discounted rates if you exceed the minimum qualifying monthly sales volume of $5,000.01
-No set-up and monthly fees
 
Accepted Payment Methods
-Major international credit cards: Visa, MasterCard, American Express, Diner's Club, JCB, and Discover
 
Ease of Technical Integration & User Experience
-Requires a PayPal business account that is relatively easy to set-up
-Provides options for you to design and host your checkout pages
-Compatible with multiple shopping cart platforms such as Shopify and Woocommerce
-Optimized for mobile payment transactions
 
Additional Features
-Protection from fraudulent transactions
-Availability of mass payments to multiple recipients
-Accepts 25 currencies from 202 countries
-Toll-free phone support

eNETS
A product of NETS, an online payments service provider in Singapore, eNETS is an integrated payment gateway that accepts multiple payment options, aside from credit card payments.
 
Transaction Fees
-3.50-4.00% per transaction
-$250 set-up cost
-$72 monthly subscription fee
-$7 withdrawal fee to SG bank account with a minimum settlement of $270
 
Accepted Payment Methods
-Major international credit cards: Visa, MasterCard, American Express, and JCB
-Direct debit payments available to those who have accounts in DBS/POSB, UOB, OCBC, Citibank or Standard Chartered Bank
-Online money transfer using a NETS bank account
-Bank transfer within their list of participating banks
 
Ease of Technical Integration & User Experience
-2-6 weeks’ complete integration process
-Utilizes a system that provides you with daily transaction updates and historical sales records
-Virtual terminals that support multiple payment options
-Limited support for mobile payment transactions
 
Additional Features
-Advanced 3D Secure customer authorisation to verify transaction and prevent fraud
-Customisable prepaid gift cards that you can use to encourage customers to shop with you again
-Cashback services
 
Stripe
Stripe is the latest integrated payment gateway in Singapore for e-commerce businesses. It was officially launched in the country in September 2016 but is fast-becoming a strong competitor in the local online payment processing industry.
 
Transaction Fees
-Transaction fees are based on a fixed percentage and a flat fee rate per transaction (3.4% + $0.50 fixed fee per successful credit or debit card transaction and 2.2% + $0.35 on other payment methods such as Alipay and WeChat Pay)
-Offers volume pricing discounts for enterprises that process monthly payments from $40,000 or less to $5,000,000 or more
-No set-up and monthly fees
 
Accepted Payment Methods
-Major international credit cards: Visa, MasterCard, American Express, Diner's Club, JCB, and Discover
-Alternative online money transfer methods: WeChat Pay and Alipay
 
Ease of Technical Integration & User Experience
-Provides options for you to create a custom payment flow to match your website’s existing UI/UX design and colours
-Compatible with multiple shopping cart platforms such as Shopify, Woocommerce, and Magento
-Allows you to save card details so customers can pay again with a single click
-Optimized for mobile payment transactions
 
Additional Features
-Fraud protection
-Credit card data portability
-Flexible currency conversion from their list of accepted currencies

BrainTree
BrainTree is an integrated payment gateway owned by PayPal. But unlike PayPal, it offers a more modern solution for managing the split payments that you share with them in exchange for using their app.
 
Transaction Fees
-Transaction fees are based on a fixed percentage and a flat fee rate per transaction (3.4% + $0.50 fixed fee per successful credit or debit transaction)
-No set-up and monthly fees
 
Accepted Payment Methods
-Major international credit cards: Visa, MasterCard, American Express, Maestro, Diner's Club International, JCB, Discover, and UnionPay
-Online money transfer method: PayPal
-Mobile payment methods: Apple Pay, Google Pay, and Android Pay
 
Ease of Technical Integration & User Experience
-Offers an advanced option for customising your checkout page for a more user-friendly experience
-Relatively easy to use considering the amount of customisation it allows
-Compatible with multiple shopping cart platforms such as Bigcommerce, Magento, and Wufoo
-Optimized for mobile payment transactions
 
Additional Features
-Protection from fraudulent transactions
-Credit card data portability
-Accepts payments in over 130 currencies
 
Conclusion
There is no perfect and one-size-fits-all payment option. Your business needs will determine your website’s payment operations and payment gateway accordingly. As a new e-commerce business, however, the best option for you is to avail a hosted payment gateway due to its quick setup process and easy integration into websites. Moreover, as reiterated previously, its service provider is the one responsible for meeting legal compliance methods and data security requirements, so you will not be held accountable for unexpected payment processing errors and data compromise issues.

The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.

Satish Bakhda

Satish Bakhda

Satish Bakhda is the Chief Operating Officer at Rikvin. He brings with him over 15 years of experience in the corporate services industry and is a regular speaker at marketing events around the world. He is also a consultant on matters relating to incorporation, relocation, accounting and taxation in Singapore.

Contact Information