This is part three of a series summarizing top stories and key events in Singapore's tech industries in the past year.
As one of the world's financial hubs, it makes sense that fintech startups would also find their homes in Singapore. There are currently 3,635 startups headquartered in Singapore. 134 of those are fintech startups.
Fintech in Singapore is a combination of companies that help with foreign exchange, personal finance, blockchain, and payments. The country's push to become cashless sparked a few initiatives in 2018, including the country's monetary authority issuing guidelines that help secure e-payment transactions from fraud.
At the beginning of the year, customers already had a variety of cashless payment options, including paying via a linked bank account, linked card, mobile wallet, or mobile application service like WeChat Pay, Alipay, or FavePay. Some of those initiatives were spillover from 2017, when PM Lee's national speech sparked the beginning of a national push for e-payment avenues. 2017 also saw the launch of PayNow, a peer-to-peer funds transfer service that currently has nine partner banks in Singapore.
According to Crunchbase, the top payments providers headquartered in Singapore are online and mobile entertainment provider Sea Group (Garena), inventory management software company TradeGecko, and cryptocurrency token swap Kyber Network.
Top payments companies worldwide are Ant Financial (Alipay, which has WeChat Pay as its main competitor), Go-Jek, Stockholm-based Klarna, and Transferwise.
Meanwhile, foreign payments players that have a foothold in Singapore include PayPal, Amsterdam-headquartered Ayden, which counts Spotify, eBay, and Microsoft among its users. London-based Transferwise, which seeks to facilitate cross-border money transfers at a set mid-market rate and Stripe, a payment gateway for online businesses are also present. In September 2018, Striple chose Singapore to be its Asia-Pacific hub.
Since mobile phones are often the vehicle through which payment gateways operate, Apple Pay, Google Pay (which was launched to replace Android Pay, and Samsung Pay have also made a push - and are accepted by several vendors in Singapore.
Mobile providers also offer their own payment wallets, such as Singtel Dash, which can be used to send or remit money, as well as spend at linked merchants. Singtel Dash is also accepted payment for select taxi companies and can also be used to pay for public transportation in Singapore. M1 wallet can be hooked up to a debit or credit card and used at vendors who select those cards. Starhub's SmartWallet works in conjunction with public transportation, DBS, and Mastercard.
The payments dilemma
The problem, then, is not that there are not enough payments gateways but that there are a lot of them. They make money often through fees - like processing fees - and that can cost the small businesses who want to put those on their platform. Meanwhile, cash is free. So where's the incentive, especially for small businesses?
One of the incentives is time. For PM Lee, the incentive was the ease with which any smartphone user could pay nearly any vendor - from large stores to street food stalls - with a smartphone. Less time making change means more products sold - and less runs to the ATM for cash-holders.
But time is an incentive, and processing times can kill. While NETS debit-type terminals can be found in select hawker stalls, as of the end of 2018, hawker stalls were not ensured same day pay - which is needed when the previous day's earnings must be used to buy more materials. January 2019 changed that.
In the meantime, the battle for user numbers is going to continue into 2019. If it's costing a business to keep memberships with several payment gateways, they're going to use the ones that people use the most. That means more promos for customers on the part of those gateways (GrabPay is trying this with its rebate program and rewards program) and competition between payment gateways with less of a foothold in the region.
The Singapore Fintech Association is a non-profit initiative that seeks to catalyze collaboration, connection, and co-creation in Singapore's fintech system. One of its biggest events is the Singapore Fintech Festival, an annual series of events that seeks to bring the fintech community together through panels, discussions, and networking events.
Notable fintech fundings in 2018 include Funding Societies, a peer-to-peer lending platform that US$25 million series B funding for a total of US$32.6 million. Meanwhile, Instarem helps customers send money overseas at a guaranteed transfer amount. It raised US$20 million of a US$45 million series C round in November 2018. It currently has US$38 million.
TenX is a cryptocurrency exchange that allows its users to hold, send, and receive cryptocurrency like Bitcoin or Ethereum. The currency can be used as payment through a Visa card. Based in Singapore, it currently is working on getting cards live in other Asia-Pacific countries. It has a total fundraise of US$159.1 million, which ranks it thirteenth on the list of most funded startups in Singapore.
Meanwhile, companies like Grab have also forayed into the payments area. GrabPay, which launched in 2017, allows customers to pay for their rides as well as several vendors around Singapore using a cashless wallet operated through the Grab app. Regional competitor Go-Jek has made waves in Indonesia with Go-Pay, its own cashless wallet. That wallet has not yet launched in Singapore. With the app still fresh in the Singapore market, 2019 may or may not see a push for the wallet in Singapore.
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