In Singapore, Digital Wallets are Set to Overtake Credit Cards and BNPL is Fast-Growingby Fintech News Singapore March 24, 2021
COVID-19 has spurred a spike in e-commerce globally, propelling with it digital payment adoption. In Singapore, digital wallets are set to overtake credit cards as the preferred online payment method over the next four years, and buy now pay later (BNPL) options will grow the fastest, according to the 2021 Global Payments Report by FIS.
Released earlier this month, the report looks at how consumers around the world are paying and which methods are set to take the world by storm.
In Asia-Pacific (APAC), digital wallets dominated e-commerce payments, accounting for more than 60% of APAC e-commerce payment methods in 2020. Chinese consumers led the way with digital wallets accounting for 72.1% of e-commerce purchases. In India and Indonesia too digital wallets were the preferred online payment method in 2020, representing 39.7% and 29.3% of online purchase transactions, respectively.
Digital payments surge
In Singapore, credit cards were the most popular online payment method in 2020, but by 2024, this is expected to change with digital wallets taking the lead and account for 27% of online purchase transactions.
Recent data from the Monetary Authority of Singapore (MAS) show accelerated adoption of e-payments in the city state amid the pandemic. PayNow, an electronic instant fund transfer service in Singapore, saw individual registration rise by 1.6 million in 2020, bringing the total number of registrations to 4.9 million. PayNow Corporate registrations for businesses doubled to about 240,000. This means that 80% of residents and businesses are currently on PayNow.
The volume of money transacted through the service doubled from a year ago to S$5 billion in December 2020.
BNPL on the rise
Rising digital wallet adoption in Singapore will come on the back of decreasing cash use and will be coupled with the rise of BNPL. Whilst currently representing only 3% of the market, BNPL will increase to 13% of the online payment market by 2024, making it the fastest-growing online payment method, the FIS report says.
BNPL solutions, which allow users to buy a product immediately while delaying payment, have risen to popularity around the world amid the e-commerce boom and a cautious attitude toward credit card debt.
Market research and consulting firm Coherent Market Insights projects the global BNPL market to grow at an annual rate of approximately 21.2% between 2020 and 2027 and reach US$33.6 billion. APAC is expected to be the fastest-growing region during the forecast period owing to increasing mobile Internet users.
E-commerce predictions for Singapore
Singapore’s e-commerce is projected to grow 40% to reach US$10 billion by 2024, with mobile commerce making up for 60% of e-commerce activity, compared to 55% in 2020.
Over the past years, mobile commerce has risen steadily in Southeast Asia with Shopee, the mobile commerce platform owned by Singapore-based tech behemoth Sea Group, emerging rapidly as a leader.
Last year, Shopee was the most-downloaded shopping app in Southeast Asia’s biggest markets – Indonesia, Malaysia, Thailand, Vietnam, the Philippines, and Singapore –, according to app tracker App Annie.
Sea expects e-commerce revenue to double this year, forecasting 2021 revenue at Shopee of US$4.5 billion to US$4.7 billion, up from US$2.2 billion in 2020.
Sea’s mobile wallet service also gained traction in 2020 with payment volume reaching US$7.8 billion. The firm has been working to establish fintech as its third growth pillar. It has acquired banking licenses in Singapore and Indonesia.
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