Online shopping boosts Singapore's cashless payments market
Seven in 10 consumers shopping online increased their use of digital payment methods.
Singapore’s digital payments have received a boost in the form of changes in consumers’ shopping behaviors during the pandemic, according to the results of the UOB ASEAN Consumer Sentiment Study.
The study, which surveyed 1,000 Singaporean consumers, found that seven in 10 have increased their use of digital or cashless payment methods, such as credit or debit cards, mobile banking apps and e-wallets since the onset of the COVID-19 pandemic, according to the latest results of the UOB ASEAN Consumer Sentiment Study.
Online shopping was named as the critical driver behind the shift to digital payments. Online shoppers formed 86% of Singapore consumers using digital payments during the pandemic, UOB found. Of these, 73% reported an increase in their use of digital payment methods.
Those who did not shop online still reported a rise in digital payments, with more than half of such respondents, or 53%, saying they use digital payments more than they did before the pandemic.
Physical credit and debit cards, the dominant form of cashless payments in Singapore, saw the biggest increase, with 58% of consumers saying they used them more frequently during the pandemic. Cards came ahead of mobile banking apps (47%) and e-wallets (34%).
Meanwhile, 30% of consumers in the study said they have used cash more amidst the COVID-19 crisis.
The rise of cashless payments has been high across all generations. Millennials saw the largest increase in such payments at 77%, ahead of Generation Z (73%) Generation X (64%) and Baby Boomers (61%).
“Digital payments went from being a convenience to an essential service following the swift and sudden impact of COVID-19 on our lives,” noted Jacquelyn Tan, head of group personal financial services, UOB.
Tan said that one of the biggest hurdles to a truly cashless society has been the ingrained behaviours of consumers, which are formed over many years and tend to shift only gradually.
UOB’s study found two in three Singaporeans said they would still value face-to-face interactions post-COVID-19 when it comes to managing more complicated financial matters. This is consistent with other ASEAN markets, where majority of customers still wanted their bank to provide a physical and human connection for more complex banking needs, UOB noted.
“Whilst we expect a digital-first ‘muscle memory’ to remain for payments, customers are clear that they still want face-to-face interactions for other financial services. The challenge ahead, and one we have been focused on as part of our omni-channel approach, is to digitalise more of our processes and solutions without losing the human connection customers expect their bank to provide,” Tan noted.
Amongst the five ASEAN countries covered in UOB’s study, Singapore saw the second highest share of consumers (70%) who said their use of digital or cashless payments had gone up, ahead of Vietnam (67%), Malaysia (63%) and Thailand (50%), but behind Indonesia (74%).
However, the surge in digital payments has also not necessarily spelt the end of the road for cash in Singapore, which maintains a stubborn presence, especially as the economy reopens and business activity at physical stores picks up. As many as 63% of consumers said they use cash at least once a week. This goes up to 86% for the Baby Boomer generation, UOB reported.
Meanwhile, close to nine in 10 said that they are willing to go cashless entirely if the conditions are right. The top three conditions they cited were digital payment methods becoming easier and more convenient to use; improvements to the security of such payments; and a wider acceptance of cashless payment methods by retailers.
Photo courtesy of Wikimedia Commons.