Singapore Payments Roadmap

1 Singapore Payments Roadmap Enabling the future of Payments 2020 and beyond . august 2016 . The evolution of the Payments ecosystem forms a vital component of helping Singapore accomplish the Smart Nation Vision and maintain its position as the financial heart of Asia. 2016 KPMG Services Pte. Ltd. (Registration No: 200003956G), a Singapore incorporated company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 2. About the report KPMG in Singapore was commissioned by the Monetary Authority of Singapore to look into the state of the Payments ecosystem in Singapore . More than 2,500 consumers, merchants and other stakeholders were surveyed for the report, with recommendations made on how Singapore can improve the Payments systems in support of the Smart Nation Vision and to the greater benefit of all Singaporeans.

2 The contributions of the KPMG staff . Adrian Harkin, Alexander Pariyskiy, Dominick Chillemi and Jenny Murray - are acknowledged in this report. 2016 KPMG Services Pte. Ltd. (Registration No: 200003956G), a Singapore incorporated company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 3. Payments in the Smart Nation What we did 50. We spoke to stakeholders in Singapore 's payment systems and around the world to 2000 Market participant 15. comprehensively understand Consumer interviews 6. the current state and uncover surveys opportunities for the future of Payments in Singapore as a Smart Nation Largest banks Merchant focus group 500. Merchant 16. surveys Consumer focus group What we found What we recommend A Payments ecosystem that is safe, sound, and Build on existing capabilities to enhance the payment secure with world-class technology, but where systems in line with global best practices and consumers and businesses still rely substantially on Singapore 's Smart Nation Vision cash and cheques A strong regulatory framework creating a Level the playing field and enhance safe, sound.

3 And secure Payments consumer protection by streamlining and landscape strengthening the regulatory framework The underlying Infrastructure is world- Promote collaboration by establishing a class and provides the backbone to new governance model develop effective solutions The launch of FAST* supports Support innovation and systems 24/7 Payments in real-time and is improvement by drawing the amongst the first of its kind in blueprint for Payments the world Limited adoption of electronic and Develop interoperable solutions by innovative Payments due to lack of access leveraging on world-class infrastructure to effective solutions Simplify card acceptance and Reliance on cash & cheques due improve customer experience by to entrenched behaviours and unifying EFTPOS systems inefficient support processes Enable more convenient FAST. Payments by adopting a central The cost of cash and cheques to addressing scheme the economy is at of GDP.

4 Enhance consumer and business adoption of efficient alternatives by supporting seamless bill Payments *FAST: Fast and Secure Transfers and collections 2016 KPMG Services Pte. Ltd. (Registration No: 200003956G), a Singapore incorporated company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 4. Payments in the Smart Nation Payments in the Smart Nation Govern Build Technology Deliver a Seamless Infrastructure and and Enterprises Experience Competition The three pillars of the Smart Nation Accomplishing the have an international orientation, so Payments by means of cross- development of a world leading Smart Nation Vision border transfers will only gain Payments ecosystem. will allow Singapore to more importance. Further, Singapore also consistently ranks In Singapore , the payment maintain its position as a top 5 world travel destination, systems of the future are as the financial heart and its payment systems serve characterised by a transition from of Asia.

5 Improvements millions of visitors each year, paper-based instruments to making interoperability and ease electronic platforms, infrastructure to the payment of access essential to global that promote interoperability, systems form a vital travellers. efficiency and security, and a ubiquitous user experience that component in Accounting for these factors, the cuts across market segments and achieving this goal. accomplishment of the Smart demographics. Nation Vision is vital to Given Singapore 's financial Singapore 's continued role as a In order to achieve this end-state, strength and stability, coupled centrepiece of the regional the MAS is fostering innovation in with its strategic location, the economy. Integrating the Payments landscape by country has grown to become a technological innovations in facilitating cooperation amongst leading global financial centre, telecommunications with market participants to create with a major role in regional and advanced data and analytics to efficient and interoperable international Payments .

6 Payment improve the lives of its citizens solutions that are sustainable and flows between individuals and and businesses across the universally accepted, addressing businesses in Singapore are country, Singapore is poised to key infrastructure and governance substantial. As a major trading become a leading Smart Nation. challenges to ensure stability. hub, trade finance centre, and gateway for investments in Asia, The Monetary Authority of By creating payment solutions that there is an even larger volume of Singapore (MAS) has the are swift, simple, secure, international payment flows. opportunity to underpin the accessible to all and accepted by Companies based in Singapore realisation of the Smart Nation all, the MAS will help achieve the Vision by engineering the Smart Nation Vision. 2016 KPMG Services Pte. Ltd. (Registration No: 200003956G), a Singapore incorporated company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

7 All rights reserved. 6. Payments in the Smart Nation The MAS vision for payment systems is met with several Fulfilling the challenges in the current landscape. These include limited governance and ownership of the infrastructure. These factors MAS Vision contribute to the lack of interoperability, inconsistent user experience, limited adoption of electronic and innovative Payments , inhibited accessibility to efficient methods, the continued reliance on paper-based instruments, and higher costs to the economy. While challenges do exist, the strength of the current regulatory framework has helped establish an ecosystem that is safe, sound, and secure. In order to fulfill the MAS vision and facilitate the evolution of payment systems in Singapore , collaborative actions on behalf of consumers, businesses, and government entities must be taken by the MAS and other market participants. Critically, this includes changing the regulatory framework to provide an increased focus Addressing challenges on consumer protection, competition, and innovation.

8 Will create payment The goals and initiatives contained herein are designed to address solutions that are Swift, these identified challenges and overcome barriers to best-in-class Simple, Secure, Accessible performance while maintaining the high safety and security to All and Accepted by All standards that the payment systems are built upon today. The aggregate speed of transactions in Singapore , when Making compared to benchmark jurisdictions, faces several distinct challenges. Acceptance of electronic Payments is inconsistent and Payments the reduction of paper-based instrument usage is slow. Corporate adoption of electronic Payments is inhibited by lack of access to FAST, the requirements for liquidity / working capital to run day- faster to-day businesses, and limited pressure from consumers to expand instrument acceptance beyond cash and cheques. In order to overcome these challenges, broader adoption of FAST.

9 Is required by both businesses and consumers in addition to utilisation of the system by businesses to accept and make Payments . Measures to facilitate this volume shift include the enablement of convenient direct debit through mandate management, opening access to businesses and merchants to Speed of settlement can FAST, enabling FAST acceptance at the point-of-sale (POS), be increased by moving to incentivising system use, and creating public / private alliances innovative payment aimed at lower-value, daily consumer purchases. These measures should be undertaken by a newly formed governance structure in methods supported by the form of the Payments Council in addition to enhancing the world-class systems existing regulatory framework. 2016 KPMG Services Pte. Ltd. (Registration No: 200003956G), a Singapore incorporated company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

10 All rights reserved. 7. Payments in the Smart Nation In its current configuration, the Payments ecosystem in Singapore Simplifying has no centralised body responsible for overseeing and coordinating improvements. This has led to confusion at the POS, Payments excess infrastructure, and limited adoption of more efficient payment methods by consumers, businesses, and government entities. These collectively contribute to higher cost payment systems. The creation of a single governance structure, the Payments Council, will enable more rapid and complete adoption of Payments innovations and foster competition in the landscape through simplification in the regulatory and operational environment. The Payments Council will deliver effective, representative (demand and supply side) decision-making and drive improvements in the payment systems to meet changes in Creating a simplified the global landscape.