In the early 14th century, the bustling port city of Temasek, now known as Singapore, was a vibrant hub of trade and commerce. Merchants from China, India, and the Malay Archipelago converged here, exchanging goods like silk, spices, and precious metals. The city’s strategic location made it a melting pot of cultures and a battleground for economic dominance. Fast forward to the 21st century, and Singapore’s role as a global trade hub remains unchanged, but the battleground has shifted from physical goods to digital payments.
Singapore's merchant payment sector is a bustling hub of competition and innovation, with a variety of payment providers vying for market share. This includes international players such as Adyen, Stripe, Checkout.com, Nuvei, and Worldpay, as well as regional providers like GoTo and Shopback. According to Forrester's report, The Merchant Payment Providers In Asia Pacific Landscape, Q3 2024, the functionality and use cases of these providers have been analysed, confirming the intense competition among Singapore's merchant payment providers. Banks and card organisations are also locked in a fierce rivalry, with international card networks like Visa, Mastercard, and AMEX investing heavily in Singapore, preventing any single card organisation from dominating the market.
On the consumer side, credit cards and credit-card-based payment methods like Apple Pay and Google Pay remain popular due to the generous rewards and Singapore's high bank account penetration rate, which is the highest in the Asia-Pacific region. Forrester data shows that over half of Singapore's online adults have used credit cards for shopping in the past 12 months. However, emerging digital wallets and QR code payment methods are also gaining traction. PayNow, a unified QR code payment system, has become increasingly popular, especially among small and micro merchants, as it eliminates the high interchange fees associated with credit card transactions. Bank-provided payment apps have also gained popularity. According to Forrester’s data, DBS Bank’s payment app, PayLah!, has achieved high penetration, with an average usage rate of around 30% among consumers across all age groups in Singapore. Additionally, Grab's stablecoin payment launch in March 2024 has injected new vitality into the market, making Singapore the first country in Southeast Asia to introduce blockchain-based stablecoins on a mainstream digital platform, offering consumers more choices and intensifying market competition.
Forrester's data indicates that Singapore's ecommerce market has grown exponentially from 0.75 billion SGD (0.57 billion USD) in 2014 to a projected 11.51 billion SGD (8.79 billion USD) in 2024, a more than 14-fold increase in a decade. The share of mobile commerce in total ecommerce sales is also increasing, with Forrester predicting that it will account for over 73% of total ecommerce sales in Singapore by 2024. The high level of digitalisation and mobility will further foster a cashless society and deeper digital financial services. Major local ecommerce platforms like Shopee and Lazada are developing their own digital wallets, such as Shopee Pay, and expanding into other financial areas like digital banking, consumer lending, and Buy Now, Pay Later services. These platforms act as a catalyst for consumers to adopt digital payment methods, and the mature digital payment habits formed by years of ecommerce development in Singapore will further promote a cashless society and the full digitalisation of financial services in the near future.
In addition to ecommerce platforms, other mainstream digital platforms include ride-hailing apps like Grab and Gojek. Grab has evolved from a ride-hailing app into a superapp, offering services like transportation, food delivery, shopping, payments, lending, and insurance. Superapps will further stimulate the usage of digital payments. Food delivery platforms like FoodPanda and Deliveroo are also important platforms that deepen digital payment habits and promote a cashless society.
With local payments highly digitised and competitive, the next innovation frontier lies in cross-border and business-to-business (B2B) payments. These areas are less digitalised compared to consumer payments and have many industry pain points that can be addressed by emerging digital solutions.
In the cross-border payment space, we are witnessing the rapid development of regulator-driven QR code payment methods. For example, the central banks of Singapore, Indonesia, Thailand, Malaysia, the Philippines, and India have successfully completed the phase three blueprint for Project Nexus, an initiative to connect domestic instant payment systems for cross-border payment scenarios. With the initial wave of participating countries in the Asia-Pacific, Nexus has the potential to connect markets with 1.7 billion people worldwide, allowing them to make instant payments to each other easily and affordably. Banks, card networks, and payment service providers (PSPs) should pay attention, as Nexus will create a new cross-border payment infrastructure that will change existing business models and technology stacks. Merchants should assess their readiness to integrate with this alternative payment rail and evaluate the benefits versus costs. New QR code-based payment methods will become a strong supplement to SWIFT and card networks, and we will see more payment companies and financial institutions participating in the new QR code cross-border payment ecosystem to develop new business models. In the B2B payment sector, Singapore faces several trends and challenges:
The transition to digital payment systems offers significant improvements in speed and productivity compared to traditional manual invoice sending. Two-thirds of Singaporean businesses prioritise digital payments as a key task. Despite being one of the world's most advanced payment markets, less than a quarter of B2B businesses in Singapore report having adopted digital payments.
The challenge of cross-border payments contrasts Singapore's optimistic stance with the global market. Although Singapore has transitioned to an almost cashless society and is seen as an innovator in real-time payments and digital wallets, these innovations have not extended to B2B transactions. Many B2B businesses still rely on wire transfers and bank transfers, hindering the efficiency of cross-border transactions.
There is a demand for innovative fintech solutions in Singapore's B2B payment landscape that can address existing challenges and unlock new opportunities. These solutions may include modern, streamlined payment systems that enable B2B businesses in Singapore to adopt and integrate digital payment systems, benefiting from real-time payment networks and simplified payment processes.
Singapore is at the forefront of central bank digital currency (CBDC) projects, which could reduce transaction costs and facilitate cross-border payments. Cambodia, Thailand, and Singapore are actively advancing CBDC projects, potentially increasing financial inclusivity and promoting the integration of digital currencies into a broader payment ecosystem.
In the 19th century, Sir Stamford Raffles envisioned Singapore as a free port, a vision that transformed the island into a thriving centre of trade and commerce. His foresight laid the foundation for Singapore’s economic success, turning it into a global financial hub. Today, Singapore stands at the cusp of another transformation, driven by digital payments and financial technology.
As a financial, trade, and fintech hub in the Asia-Pacific region, Singapore is poised to become a centre for future payment innovations. For consumers and businesses in Singapore, payment experiences and efficiency will continue to improve, with an increasingly rich array of payment services available. This will undoubtedly further stimulate consumption, trade, and economic development. For PSPs, although the Singaporean market is limited in scale, the value created by each customer is high. Using Singapore as a regional headquarters and springboard to reach more of the Southeast Asian and Asia-Pacific markets is an inevitable strategy for payment providers. In the coming years, we will see increased competition among PSPs and their investment in the Singaporean market.
Meng is a senior analyst at Forrester covering fintech and payments research. He provides advice to leading global financial institutions, fintechs, tech firms, and enterprises, and is frequently quoted by mainstream media, including Forbes, Financial Times, and The Business Times. He also speaks at global finance events such as Sibos, Hong Kong Fintech Week, and Finovate, as well as on news networks including CNA. Meng is based in Singapore.
Forrester is a global research and advisory firm that helps leaders across technology, customer experience, digital, marketing, sales, and product functions use customer obsession to accelerate growth. Through proprietary research, consulting, and events, leaders worldwide are empowered to navigate change and put their customers at the centre of their leadership, strategy, and operations.
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