Cash is not only not a king, but there is increasing realization among cities and states, that the cost of cash is not worth it. From reducing costs of producing physical money, increasing administrative efficiencies, to even reducing cash-related violent crimes — going cashless is where many are going, including Singapore.
I stumbled across a new coffee shop on my way into work this week. The sort that has ‘drip’ and ‘cold brew’ on the menu and one too many coffee beans for me to choose from. But what really caught my attention was the sign…’No Cash. Card / Crypto only.’
With its digital savvy population, Singapore’s move to a cashless society seems natural. Singapore topped the Economist Intelligence Unit’s Asian Digital Transformation Index in 2018. This is due to the widespread availability of reliable, fast and affordable digital connectivity, and the strong digital literacy of the population. Amazingly, about 97% of Singapore’s population has access to super-fast internet connectivity, thanks to the proliferation of mobile devices and smartphones.
Added to this is the Singapore government’s drive to reduce the use of cash and eliminate cheques completely by 2025. According to Ong Ye Kung, the Education Minister of Singapore and a board member of the Monetary Authority of Singapore, electronic payment is growing by more than $10 billion a year. Moreover, more than eight in 10 Singapore consumers have adopted e-payments, while almost three in five Singapore merchants are accepting e-payments. This bodes well for Singapore’s transition to a cashless society.
As Singaporeans are being groomed to go all digital and cashless, the next step in the evolution is likely to be cryptocurrency. Why? Simply because it is the native currency of the internet. Today, the “no cash” rule does not sound that crazy for the smartphone generation. While cryptocurrency currency acceptance is still nascent, in a few years time we may not be surprised by “crypto only” signs.
Singapore merchants are starting to accept cryptocurrencies. In November 2017, Skyline became the first ever club in Singapore to accept cryptocurrency as payment for food and drinks. In January 2019, the Catalist-listed SK Jewellery Group announcedthat it would accept six different kinds of cryptocurrency at its stores in Singapore. Daniel Lim, chief executive of SK Jewelry, said that this move could bring opportunities to reach out to “a wider pool of customers, namely, the Millennials and the more tech-savvy generation.”
In fact, the same can be said for other Asian nations. Asia is at the vanguard of the global digital transformation. New payments technologies and channels are providing great opportunities for financial institutions and new entrants, driving emerging economies to shift toward the inclusion of the unbanked, the replacement of cash, and the reduction of the shadow economy. In Asia, there are roughly about 900 million people outside the banking system. Most markets, however, have high mobile phone penetrations, reaching 92% and 73% in China and India, respectively. This spurs innovation. Take two iconic examples: with 700 million monthly users, China’s WeChat addresses every aspect of its users’ lives through its mobile wallet, from taxi booking to food delivery. And in India, PayTm has grown in five years’ time from a mobile app for recharging telephone accounts to a broad e-commerce platform, with 80 million registered users conducting 60 million transactions each month.
It is true that issues such as price volatility, long confirmation times, and poor ease of use make cryptocurrency a cumbersome option. However, solutions are emerging which make cryptocurrency a viable option. For example, US based Squarehas a patented process by which bitcoin or any other cryptocurrency may be accepted by a merchant, who could then choose to cash out in their chosen currency. The solution ensures that Bitcoin transactions can be approved at roughly the same speed as a credit card transaction. Similarly, Singapore-based SelfPay is developing a POS system which allows merchants to accept cryptocurrencies without changing their habits.
We may not see a significant uptake of cryptocurrency today as shifting consumer and merchant behavior takes time. However, merchant-friendly solutions are changing the landscape bit by bit. Moreover, cryptocurrencies are gaining popularity among millennials who tend to distrust traditional financial institutions. I can easily envision a day when consumers start to look to a retailer’s acceptance of cryptocurrency payments (or lack thereof) before considering their actual product.
Even if it is that first cup of coffee of the day.
