Singapore government mulls laws on e-payment fees

Country is assessing other jurisdictions to decide whether to regulate e-payment surcharges to encourage cashless adoption, but says it currently wants to focus on pushing low-cost options to spur market competition.
Written by Eileen Yu, Senior Contributing Editor

The Singapore government may be eager to drive e-payment adoption in the country, but it appears to want to do so through encouraging market competition, instead of introducing legislation to bring down surcharges for e-payments.

Deputy Prime Minister Tharman Shanmugaratnam, who also was Minister-in-Charge of the Monetary Authority of Singapore (MAS), said the government was assessing the impact of laws regulating e-payment fees in other countries.

His comments were part of a written response to a question posed in parliament this week, on whether there were plans to mandate a cap on transaction fees and platform rental charges imposed by e-payment platform providers to drive the adoption of cashless payments amongst consumers and, in particular, small and midsize businesses.

Tharman said: "As of now, our focus is to ensure low-cost options are available and spur competition to keep cost affordable [for] small businesses. It will minimally be cheaper than having to handle cash.

"As to whether we should regulate the fees for e-payment, we are studying the experience of other jurisdictions and will study them carefully."

He noted that the government was looking at various components to drive e-payment adoption, including ensuring user interface was convenient and easy to use, establishing necessary standards such as a common QR code to facilitate all types of e-payment, and keeping cost of e-payment as low as possible.

"To keep fees at a reasonable level, it is important to ensure there is enough competition. Hence, we have always insisted on an open architecture system so that e-payment will not be monopolised over time by one dominant player," the minister said.

MAS, for instance, collaborated with the banking community to introduce a peer-to-peer funds transfer service, called PayNow. This would be further expanded to include businesses to provide a cheaper way to make e-payments, Tharman said, adding that PayNow would support the common QR code once the specifications were established later this year.

He noted that services such as PayNow eliminated the need for point-of-sale (POS) terminals or rental fees associated with such equipment.

"The government has also been engaging various stakeholders to raise awareness of the available e-payment solutions and, hence, help drive further adoption," he added. "Businesses need to be aware of the advantages of various e-payment solutions and identify a solution that would best suit their needs."

Singapore Prime Minister Lee Hsien Loong had been a huge advocate of a cashless society, stressing the need for the country to "catch up" to others such as China, especially as it strived to become a smart nation.

Market observers, though, pointed to prohibitively high transaction fees--typically a 3 percent surcharge--imposed by credit card companies. Consumers also were made to pay additional fees for online purchases, for example, an addition $1.50 "convenience fee" when they purchased movie tickets online or via mobile.

Governments in other countries already had implemented or were implementing laws to regulate payment fees. A new ruling last month came into effect in Australia, banning all local businesses from making consumers pay excessive surcharges for using EFTPOS--the equivalent of NETS in Singapore--and credit cards. The mandate also required businesses looking to set a flat surcharge across all payment methods to do so at the level of the lowest cost, rather than the average of the different surcharges.

Laws in the EU also prohibited banks and card companies from charging retailers more than a 0.3 percent surcharge for processing credit card payments. And from January next year, all surcharges for purchases made by cards would be banned across the region.

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