Visa’s Country Manager for Singapore and Brunei speaks to FST Media about the key challenges facing the payments industry today
FST Media: What do you regard as the key challenges facing the payments industry today?
Ooi: The key challenge for the payments industry is the prevalent use of cash by consumers. We want to become a society where it does not become a hassle for consumers to bring along cash and coins and add weight to their clothing or purses. This would provide convenience for consumers and reduce the inefficiencies of cash for merchants.
In Singapore, the electronic payments penetration is approximately 40 per cent of the personal consumption expenditure. This means for every dollar spent on consumer expenditure, 40 cents in Singapore is done through electronic payments.
As technology evolves, it is important to provide consumers the choice of using their payment cards to make purchases online and on their mobile phones. We are pleased to see more merchants, including taxi apps, provide customers with greater choice and convenience by accepting card payments.
As we move into a more connected world, customers also expect consistency in both the physical and online world. In addition, there is a shift of channel usage from computers to mobile devices. Research from the Visa mCommerce study in December 2014 showed that almost 50 per cent of Singaporeans have used mobile devices for online shopping in the past six months. Online checkout experiences continue to be a customer pain point with shopping cart abandonment rates as high as 68 per cent. Customers have to click through multiple screens, filling out detailed information before completing a purchase.
One of our priorities is to continue working with merchants, banks and the industry to help enhance the customer purchasing experience across all channels. Our clients can leverage Visa’s assets and capabilities to predict consumer behaviour by harnessing data analytics to help them in their businesses.
FST Media: How does Visa collaborate with banks to enable new payment innovations in Singapore?
Ooi: Visa’s role is to build an ecosystem that promotes the use of digital payments. We work closely with multiple stakeholders including financial institutions, merchants, consumers, businesses and government entities to ensure the continued growth in digital payments.
For added security, Visa also uses a tokenisation solution to intercept your card information at the point-of-sale terminal or online payment interface, and replace your cardholder data with randomly generated proxy numbers. This is an innovative way to enhance security because the consumer’s card data is not stored at the merchant’s database so data thieves cannot access this information.
The service also enables a faster checkout for consumers shopping online as they do not need to enter their 16 digit credit card details again once they have registered the card. This is important as security and a seamless checkout experience remain the top two barriers for consumers shopping online.
FST Media: How will you ensure Contactless payment momentum continues in Singapore to remain the fastest growing Visa payWave market in the world?
Ooi: Singapore is the most advanced market in terms of Visa payWave uptake in Southeast Asia, and is ranked second in the world for Visa contactless transactions after Australia. The number of contactless Visa payWave transactions exceeded two million for the month of September 2014, representing more than one in five of all Visa face-to-face transactions.
Visa continuously supports the growth of contactless payments in Singapore. We are also constantly expanding new acceptance points such as convenience stores and quick service restaurants. In supermarkets, we see one in two transactions for credit card payments made on Visa payWave.
Visa also works closely with merchants to provide ease of convenience to consumers in their day-to-day transactions, which are traditionally done face-to-face. For example, in the case for peer to peer payments, Visa Direct allows consumers to send payments and money transfers to another consumer’s eligible Visa card, or to their own Visa card internationally and at near real time. Visa Direct makes it convenient to split expenses, pay personal IOUs, send remittances, reload a prepaid card, or pay a Visa credit card bill without the need for people to use cash.
Currently, over 90 per cent of the banks issuing debit or prepaid cards in Southeast Asia are fast-funds enabled, which means that banks are ready to receive and send funds at near real time. There was an increase of over 120 per cent in year-on-year payment volume growth for Visa Direct.
FST Media: With the growth of digital wallets and online payments, what role do you see physical cash playing in the future?
Ooi: The use of cash will decline as we experience greater acceptance, awareness and use of electronic payments. New technology such as mobile point-of-sale will also make it easier and more cost effective for small merchants and those in remote locations to accept card payments. Visa is working with its merchants and client banks to help drive the acceptance and encourage the usage of electronic payments. We also constantly work to ensure there are no unnecessary barriers such as surcharging by merchants as we move into a cashless society.
In Singapore, cash is the main competition for digital payments as 60 per cent of transactions are made with cash, but this is changing. There is a shift from shopping with plastic as compared to digital. Today, almost 20 per cent of spend from Visanet data are online and the growth of digital spending is growing more than two times faster as compared to consumers spending in the physical world and we believe this trend will continue to grow.
Another trend that Visa has spotted is that consumers are spending more time and money shopping online. As technology evolves, we see the blurring of lines between shopping at a retail store and online. Online shopping continues to grow in popularity in Singapore. Through the Consumer Payments Attitudes Study conducted by Visa in July 2014, findings showed that Singaporeans are the top online shoppers in Southeast Asia, with 26 per cent of them shopping online at least once a week, and more than half shopping at least once a month. VisaNet data also showed a growth of 19 per cent in eCommerce transactions performed by Singaporean Visa cardholders. In comparison, domestic face-to-face Visa transactions for October grew at 6 per cent.
Mobile commerce also continues to grow, according to a Mobile Commerce research study conducted by Visa in December 2014. In the last six months based on the respondents’ transactions, 53 per cent of the transactions were made using laptops or computers, 24 per cent of the transactions were made using the tablets and 23 per cent were made using the mobile phone. The survey findings also showed a projection that mobile commerce will overtake e-Commerce in the coming year, with transactions using laptops or computers dropping to 47 per cent and use of tablets increasing to 29 per cent and mobile phones increasing to 24 per cent respectively.
FST Media: How do payments disruptors such as ApplePay, Alipay and Amazon affect Visa?
Ooi: We do not see these consumer payment services as disruptors for Visa. Instead, we view them as opportunities for consumers to further embrace cashless payments.
In September last year, Visa announced the launch of the Visa Token Service that facilitates secure online and mobile payments by replacing sensitive payment account information found on plastic cards with a digital account number.
Visa is working with a broad range of partners and clients to implement the new Visa Token Service to help protect consumer account information when shopping online or with mobile devices. ApplePay leverages the infrastructure of Visa payWave and we believe that with this new service made available to consumers, it will build the eco-system for more people to make contactless payments.
FST Media: Every leader has a legacy they wish to be remembered for, what is yours?
Ooi: As Singapore moves to a cashless society, Visa is removing barriers such as ensuring cardholders have greater convenience, security, and seamless payment experiences through contactless sales transactions and online and mobile commerce payment innovation.
Visa believes that financial services innovation will accelerate and impact more people and economies positively when banks and retailers work hand in hand with the emerging FinTech community. The power of open innovation will help create new products and services to meet the evolving needs of an increasingly sophisticated and technologically connected digital consumer.
I would like be alongside Visa in leading these positive changes in payment innovation and the lives of people around me.