The Traveller's Opinion On Why Going Cashless Matters
When was the last time you went down to a physical travel agent to book flights and hotels? Chances are, you've probably not done it for a few years now. However, the overwhelming majority of travellers still make the routine trek to the money changer in order to get the requisite foreign currency needed for trips as few even consider using their credit cards for travel spending. Despite the massive innovations in the travel industry within recent years, one stark laggard seems to be the adoption of cashless travel payments.
For an activity that is so innate to the travel experience, very few people think about the possibility of travelling without wads of cash in tow, perhaps also because people are shuffling their feet on adopting cashless payments locally.
However, we think that there are significant benefits to reap if travellers were to adopt a cashless lifestyle regardless of whether you are paying for things locally or abroad. Think this is controversial? Read on.
The roots of reluctance
Cultural and behavioural impediments towards a greater adoption of cashless payments all over the island, starting from the proliferation of incompatible payment options (ezLink, NETS, Visa/Mastercard) that 'don't talk to each other'. The half-hearted attempts of merchants like NTUC Fairprice are also a major contributor to the slow adoption of cashless payments. For some reason, their self-checkout terminals still accept cash as a form of payment, an unnecessary feature which lengthens the time needed to checkout and is inefficient once compared to a fully 'cashless and cashier-less' experience.
Yet, Singapore already has world-leading peer-to-peer payments systems.
With tools like FAST and PayNow, Singaporeans can instantaneously transfer money between bank accounts no matter which local banks and accounts are party to the transaction. These occur at no cost to the consumer. Using PayNow also means that transferring funds doesn't require one to memorise an arbitrary string of numbers that make up a bank account number as one can use the recipient's mobile number or NRIC instead.
By contrast, the closest version of PayNow in the United States, Venmo, functions more like a separate mobile wallet, which requires users to wait 1-2 days before money can be transferred between this wallet and their actual bank accounts. That being said, this minor annoyance is still better than the weird stares you'd get when trying to use a $50 or $100 note due to America's obsession with preventing the use of counterfeit cash.
Why not extend this level of innovation to encompass more payment activities?
Many say that the cashless revolution is attempting to solve an issue that doesn't exist, and its downsides include imposing extra costs on business owners and dampening charitable contributions.
However, there are a multitude of 'hidden' transaction costs associated with paying with cash too. For one, there is the physical cost of storing physical notes and coins. Next, there are significant costs involved in ensuring that your cash is secure whether you're a bank, business or just an individual. Just imagine how much of a hassle small business owners have to go through just to deposit the day's takings with the bank. Think about how insecure you'd feel if you had thousands of dollars stashed in your cafe, or how much time you would have to devote just to physically count them.
Many analysts have also said that charities will stand to LOSE out if they don't start to offer cashless options. According to one study by Barclaycard, cashless donors gave three times as more than the average cash donor. It's not hard to understand this - terminals are a fraction of the weight, and also collect an infinitely larger amount of money than tin cans ever will. In any case, it's not as if the cashless revolution will be put to a halt for these concerns - it is up to us to support and ensure that social work adapts in tandem.
This negative thinking also extends to the adoption of cashless payments on public transport. In this vein, the public has been resisting the forward thinking plans proposed by public transport operators.
Stand at the fare gantries of any MRT station and you'll soon realise that very few people have adopted the pretty revolutionary concept known as Account-Based Ticketing - we'd wager that most people haven't even heard of it. The concept for ABT lies in utilising the funds in bank accounts to pay for public transport, meaning that consumers don't have to worry about a scenario where one's travel wallet has insufficient funds. This is especially the case if one is starting their journey from a remote part of the city far away from the nearest 'top up' facility.
Using ABT also reduces the occurrence of long lines at ticket booths, dispels confusion over single journey fares and above all, the logistics (and costs) associated with the counting and organisation of the physical cash that is currently being collected across a large and complicated transport network.
The idea that people are not used to using cashless forms of payment is also moot.
Singaporeans have already been exposed to 'payment by card' systems for a long time ever since the popularisation of the magnetic stripe to the current rise of mobile payments.
One should also realise that the NETS standard has been in existence since 1985, and that many are already comfortable with using what is already a cashless standard. Furthermore, paying with a card in other countries is a process that is pretty much the same as paying with NETS locally - just slot your card into a machine.
Pray tell, the benefits of card over cash whilst on the road
Dispensing with the need to carry onerous stacks of cash with you
Many travellers get anxious about carrying money on their person when they're in foreign countries as pickpocketing or even misplacing an envelope could ruin an entire holiday. Cashless payments are the solution to this cause of anxiety.
If you're the victim of a mugging, it is much easier to cancel a card and reverse charges than it is to recover the money that you lost. Trips around humid Bangkok and freezing Helsinki are sometimes better at the back of car and paying for these services through an account-linked credit card minimises the chance of scams. Similarly, taking out a card or phone to pay at shops makes the entire process easier and eliminates confusion. Cashless payments also prevent scenarios where errant merchants and hawkers attempt to cheat tourists because they are unfamiliar with foreign currencies.
That being said, while it is fair that people used to shun paying by card overseas due to the exorbitant fees that banks charge on such transactions, recent developments in fintech have made this point moot. As proponents of cashless travel, we've already written about how the Singaporean traveller can take advantage of multi-currency accounts (no fees whatsoever) to have a more fulfilling travel experience - click here.
For germophobes, a move away from physical currency means that less people will fall sick from any of the thousands of bacteria that inhabit banknotes and coins. Don't you want to stop fiddling with alien looking coins and banknotes too? Don't you want to stop googling things like 'ways to hide money while travelling'?
Keeping track of your overseas spending
Spending within one's budget is one of the greatest concerns for travellers. Therefore, spending with your card means that you can access your transaction history when you're back home in Singapore (and even on the go with an app) in order to assess how you trip went. In some cases, consolidating your overseas spending with a cashless cash card or credit card could mean earning cashback or miles on every dollar you spend. As lovers of miles, we think that it is the best way to spend money overseas.
Anyone who's meticulously tried to keep track of everything they've spent on overseas would know just how much of a hassle it is, and realise that it is adding much unnecessary pressure to the trip. Consequently, if one were to pay more with a card, and then only note down the few transactions made by cash (when foreign merchants don't accept cashless payments), the whole travel experience becomes far less stressful.
That being said, however, we take issue with people calling for Singapore to adopt the Chinese method of conducting cashless transactions. The only reason why China was able to achieve such a quick transition to a cashless lifestyle is because it did not need to install payment terminals. In essence, the Chinese cashless revolution was a low-tech one, at least on the part of the merchant, as all they had to do was to print a Ali/Wechatpay-generated QR code.
While this very elegant and simple solution has the benefit of allowing the system to be quickly adopted, it also risks isolating the Chinese from the rest of the world. This is because no other country (on a large scale) utilises Alipay/Wechatpay QR codes as a means of conducting business, instead relying on cards issued by companies like Mastercard and Visa. You can probably imagine how hard it is for a Chinese tourist to pay for things whilst travelling when their entire world back home is ruled by QR codes.
This is not what Singapore is doing with its cashless efforts (and we hope that it remains this way). The main crux of the cashless movement lies with development and disbursement of unified point of sales terminals to merchants, allowing people to pay with ANY cashless method, be it ezLink, NETS, Visa or through Mastercard. While there are QR code based systems like Grab and Fave Pay, these should be confined to the periphery lest Singapore ends up afflicted by the Galapagos Syndrome.
The Aspirational Cashless Model of Sweden
Utilising cash in Sweden is pretty much a taboo, with cash payments only making up 2% of the country's GDP.
Everyone from grocery stores to public toilets now only accepts cards or phone-based payment methods. Churches can collect offerings over the air and few banks in Sweden now stock physical cash, instead opting to conduct business online. The reason for this religious use of cashless payments? The Swedes saw cashless as a means to discourage crime after they saw an uptick in the number of bank heists and bus robberies.
Sweden has also long had a 'PayNow' standard - Swish allows people to transfer money to each other via their mobile phone numbers, hence facilitating greater interaction in the payments space.
Additionally, figures coming out of the country have dispelled the myth that older people are completely averse to these technologies. Surprisingly, the app Swish currently has a 50% rate of adoption amongst citizens over 60.
India Lags Behind
India has consistently struggled with implementing infrastructure of any sort, especially because it has to do so for a population of over a billion people.
Recently, the elimination of its two largest notes (about 86% of the value of currency in circulation) caused a 'demonetisation' crisis through the country, which gave technocrats a glimpse into how India is fundamentally still ill-equipped to undergo a cashless revolution. Since the crisis, the growth of cash (by value) has quickly rebounded, and is now approaching pre-crisis levels.
Behind this inability to go cashless lies the fundamental fact that India has weak infrastructure and institutions - mobile phone penetration in India lags behind most countries at slightly under 39% and internet penetration stands at a low 26%. Similarly, whilst 4G is widely available in the country, network speeds are only marginally above that of 3G connections elsewhere in the world.
Travellers have the right to dream big
Understanding the physical (and psychological) hurdles that currently exist for travellers is key in trying to improve the system. We think that overcoming them is likely to bring huge benefits to the travel industry and that's why we're such fervent supporters of cashless travel payments. Even if you were to ignore the convenience of cashless travel, using a card is the safest way to carry money when travelling.
For example, a future unified payments system could mean that regardless of whether you're travelling in Gothenburg or Johannesburg, paying for public transport fares is just a simple debit transaction. To that end, we can start to eliminate incompatible contactless standards like Tokyo's Suica, Seattle's Orca, or Singapore's Ezlink; getting rid of a wasteful duplication of resources.
If such a huge country like China can muster its willpower to overcome psychological barriers and move on, it shouldn't be hard for us to do it too. After all, it's not as if China wasn't the country that literally invented coins and paper money. In that vein, we think that pushing Singapore towards a cashless future is just grasping low hanging fruits. If they could do it, why can't we? Let's dream.
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