Credit-card use in Singapore is set to fall by 40 per cent in less than five years, according to new research from global payment company Worldpay.
For its Global Payments Report 2016, Worldpay analysed 30 eCommerce markets including Australia, China, Hong Kong, India, Malaysia, Singapore, South Korea and Taiwan. For Singapore, Worldpay found that although credit cards hold a 60 per cent share of the payments market, this is expected to slide to 36 per cent by 2020.
This is described as a significant drop by Worldpay Asia Pacific GM for global eCommerce Phil Pomford. “This growing credit-wariness could be symptomatic of a wider political push to help consumers avoid debt.”
He says the Singapore government’s total debt-servicing ratio (TDSR) rules, implemented in 2013, were designed to ensure monthly debt payments do not exceed 60 per cent of a debtor’s monthly income. “This public focus on the issue of debt helps explain why credit-card use is predicted to fall nearly a quarter in less than five years, while debit-card use is expected to rise.”
For now, debit cards, cash on delivery and bank transfers each account for 9 per cent of the total payments market in Singapore. But Worldpay’s research indicates that all these non-credit payment options will double or nearly double by 2020.
Debit-card use is expected to double to become 18 per cent of the total payments market, while cash on delivery and bank transfers will represent 18 and 17 per cent respectively. E-wallet growth is likely to remain relatively flat, growing from 9 to 10 per cent share by 2020.
Consumer debt has been a growing topic in Singapore over the past few years, says WorldPay, leading the government to introduce regulations to help borrowers pay down their debts and prevent further debt accumulating.
Worldpay research indicates the government’s program to increase credit awareness and discourage too much borrowing is still resonating with consumers. They are aware of and concerned about rising household debt, and want easier access to non-credit payment options.
“Our research strongly suggests Singaporeans will start using a wider range of payment methods in the next five years, possibly influenced by the government’s work to reduce consumer debt and encourage Singaporeans to think more carefully before they shop on credit,” says Pomford.
“Therefore, online merchants wanting to win the hearts and wallets of shoppers in Singapore must offer a range of traditional and alternative payment methods – from debit cards to cash on delivery and bank transfers – because credit cards alone just aren’t enough.”
Meanwhile, Singapore’s eCommerce market is set to grow by 11 per cent to US$5.8 billion by 2020.