Xero report reveals Singapore's shift to digital payments

Xero has unveiled its "I Want To Pay That Way" report, highlighting a significant shift towards digital payments among Singapore's younger consumers, urging small businesses to adapt to these changing preferences. Conducted by Lonergan Research, the report is based on survey responses from 1,000 consumers and 506 small business leaders in Singapore.

The study shows a growing trend towards digital payment technologies in Singapore, driven by strong government support for a digitally connected society. The survey revealed that over three-quarters of Singapore consumers (76%) use credit or debit cards for payments.

Additionally, more than half the population make use of the funds transfer service PayNow (55%) or bank transfers (55%), while a fifth use the e-wallet service GrabPay (22%) and buy now, pay later platforms (21%). Notably, 30% of Singapore consumers carry only their mobile phones for payments when shopping, significantly higher than the global average of 21%.

Younger generations, particularly Generation Z, are leading the transition towards digital payment methods. As per the report, 68% of Gen Z consumers in Singapore prefer PayNow, with approximately 29% using GrabPay. This shift is aligned with the Smart Nation goals of Singapore, aimed at building a robust digital economy.

"Singapore is at the forefront of building a robust digital payment landscape, aligning with its broader digital economy and Smart Nation goals. While a supportive regulatory environment and complementary initiatives are driving digital payment development and adoption among Singapore's small businesses and consumers, targeted support to help small businesses adopt more payment options will also be crucial," said Koren Wines, Managing Director, Asia, Xero.

The report also highlights a disconnect between the payment methods offered by businesses and consumer preferences. Approximately 18% of Singapore consumers indicated they would prefer visiting another business if their preferred payment method is not accepted. Despite a push towards a cashless society, physical currency remains a vital payment method, with nearly 79% of consumers using cash, while half of the small businesses (51%) no longer offer it as an option.

Adopting these new payment methods has benefitted nearly nine in ten (87%) small businesses in Singapore, the report notes. Key advantages mentioned include reduced time to be paid (43%), customer retention (42%), and increased sales (41%). Moreover, small businesses in Singapore appear optimistic about future payment methods like biometric authentication (36%), bartering marketplaces/apps (33%), and augmented reality (33%). Additionally, 31% have shown interest in implantable payment chips, a figure significantly higher than that in Australia (7%) and New Zealand (9%).

Bharathi Ramavarjula, SVP of Payments at Xero, commented, "Understanding how different consumers prefer to pay and giving them the flexibility to pay the way they want, will help small businesses get paid faster and grow their revenue. To make it easier to collect payments, Xero is providing small businesses with more ways to get paid."

Additionally, the report includes a case study on Yeap Transport, a school bus and transport service provider in Singapore, which successfully utilised Xero’s solutions to manage their finances. The company was able to reduce their accounting reconciliation process from weeks to days and gained enhanced visibility over their finances.

The comprehensive findings of the "I Want To Pay That Way" report underscore the necessity for small businesses to adapt to evolving consumer payment preferences to maintain competitiveness in Singapore's rapidly digitising market.