"Completing the E-Payment Jigsaw" - Speech by Mr Ong Ye Kung, Minister for Education and MAS' Board Member, at the SGQR Launch on 17 September 2018
Payments Council members
Ladies and gentlemen
1 Thank you for inviting me to this SGQR launch event. This is the second e-payment related event since June this year. It reflects the intensity in which we are building up the national e-payment infrastructure.
2 So today, we are gathered here to launch SGQR as the newest feature of the Singapore e-payment system, and to make a couple of announcements. These may well be the last few jigsaw pieces we are putting in place to complete the national e-payment infrastructure.
The E-Payment Infrastructure
3 How the e-payment infrastructure is being developed is not intuitive to everyone. So let me recapitulate quickly. Our basic approach is different from say, China. We did not let the ecosystem evolve organically and be led solely by commercial players. We made a conscious decision to undertake a slower but more deliberate process – we designed an ecosystem that is both competitive and interoperable, planned it around the existing financial system, and built up the necessary infrastructure and features to support that desired outcome.
4 It started with FAST, Singapore’s 24 x 7 real-time payment system, which the banking industry launched in 2014. It is the backbone that enables payments across bank accounts and between consumers and businesses. It is open and accessible, so all banks can be a part of FAST.
5 With FAST payments as the foundation, we have been able to roll out instant payments that are more intuitive and convenient to users. We decided to leverage on the smart phone, which many Singaporeans have. And we built up the system progressively and methodically, in four steps – C2C, then B2C, then B2B, and finally C2B. Let me explain.
6 We started first with consumer-to-consumer (C2C) payments through PayNow. So consumers can link their bank account numbers to personal ID or mobile phone numbers. With that, I can send money to my friend using my smart phone, just by selecting his mobile phone number in my contact list.
7 Second, we enabled business-to-consumer (B2C) payments through PayNow as well. Businesses and organisations can make mass disbursements to individuals, such as salary crediting, insurance payouts, or giving out awards, through their customers’ personal ID or mobile numbers.
8 Recently, MOE distributed Edusave Awards not through cheques, but by sending the award money to the recipients through their personal ID numbers. The government will also be disbursing SG Bonus to citizens via PayNow if they have linked their bank account to their personal ID number.
9 Third, we facilitated business-to-business (B2B) payments through PayNow Corporate. Every business has an ID number too, called the UEN, the Unique Entity Number. Payments can be made directly to the company’s UEN, and companies can accept payments to multiple accounts by adding unique suffixes to their UENs.
10 I am very pleased by the good take-up of PayNow Corporate. Since it was launched a month ago, around 40,000 businesses have signed up.
11 Finally, we have consumer-to-business (C2B) payments. This is the hardest, because we cannot possibly expect a consumer to pay for purchases at a store by keying the UEN of the store. We won’t know the UEN. But we can capture the UEN and other payment details in a QR code, which the consumer can scan with their mobile phone and make the payment.
12 That is why we are starting to see QR codes popping up all over store fronts. This gives rise to a new problem, which is the confusion caused by the proliferation of QR codes. Which one do I scan?
13 This brings us to why we are here today.
14 QR code payments have been growing and many cash-intensive merchants, such as hawkers, are accepting them. But every scheme – e-wallet, PayNow, NETSPay – all issue their own QR code. This causes confusion.
15 We foresaw this problem. So a year ago, MAS and IMDA, with the support of the Payments Council, brought the Singapore’s QR Industry together to create a single and standardised QR code for e-payments – called the SGQR.
16 The SGQR will allow a merchant to display multiple schemes through a single QR, with all the accepted modes of payments presented below the QR. It is the first of its kind globally, and we are launching it today.
17 So expect to see more SGQRs at store fronts and in billing statements. More than 19,000 QR codes will be replaced with SGQR codes starting later this month.
Non-Bank FAST Access
18 We are not done building the e-payment infrastructure. As mentioned earlier, while the important components were built around the banking industry, we need to ensure that the system architecture is open and accessible. This is important, because it ensures new players, including Fintech companies and other non-bank players, can enter the industry and join the e-payment fraternity.
19 The system is, however, not totally open and accessible yet. Let me give a example. Sport Singapore has a very popular and useful app called “Active Wallet”, because you can use it to book ActiveSG sports facilities. So hundreds of thousands of Singaporeans are on it regularly.
20 There are a few ways you can top up your Active Wallet. You can use a debit or credit card, or link your DBS or POSB bank accounts (where you even have the choice of auto top-ups). Or you can go to any ActiveSG Sport Centre to top up your Active Wallet.
21 But the current way to top up from bank accounts is limited as it depends on whether each bank enables this feature. If we allow Sport Singapore to access FAST, you will be able top up your Active Wallet from any bank account through a FAST transfer.
22 So if we want the e-payment system in Singapore to be truly open, accessible and competitive, we will have to open up FAST to other non-bank e-wallet payment solutions, so that they can interoperate with bank accounts.
23 That way, we can top-up and refund our e-wallets from bank accounts, instantly. In the past, two persons must be using the same e-wallet in order to send money to one another. In future, they can send money across different types of e-wallets, so long as they are all connected to FAST.
24 What we intend to do is not new. UK and India have allowed non-banks to access central payment infrastructure to encourage competition. Hong Kong and Malaysia are also rolling out similar Faster Payments infrastructure very soon and are broadening access to payment players.
25 So we will allow non-bank players to have direct access to FAST. This is to enable their e-wallets to bring greater convenience to consumers. But e-wallets are regulated under a much simpler framework that has been calibrated to payment activity, and only the risks that payments pose. E-wallets are not regulated like banks, so they cannot operate like banks, such as taking deposits or giving loans.
26 We will be forming a Direct FAST industry working group, comprising the operator of FAST, banks, non-banks, and MAS, to develop business and technical requirements for non-banks to connect directly to FAST. We are glad that Grab, Liquid Group, MatchMove, Razer and TransferWise have signed up for this working group. (Sport Singapore is not in it – I am just using them as an example.) This is a major milestone in our infrastructure development.
27 We will also seek expressions of interest to build and operate a FAST Aggregator. The aggregator will help lower costs by aggregating the technical requirements across a number of players. Therefore, the aggregator should be independent, provide open access, and be interoperable with the existing FAST infrastructure and other players.
Enhanced Consumer Experience
28 As the e-payments landscape becomes more developed and different modes of payment are widely adopted, we need to ensure that the players are well-regulated. New requirements under the upcoming Payment Services Bill will set minimum standards to address the range of potential risks.
29 Specifically, as we enable more non-bank players to connect to FAST, MAS expects them to adopt a mindset of open accessibility and good customer service. They have to provide two-way payments between e-wallets and bank accounts. In other words, users should be able to transfer money from bank accounts to e-wallets, or e-wallets to bank accounts.
30 Open access to a common infrastructure like FAST means that banks and non-banks will have to compete harder to gain and retain customers. They will have to innovate and offer value-added services constantly to stay ahead of the curve.
Safety Underpins Our E-Payments Journey
31 All these efforts will come to naught if people do not feel safe using e-payments. The last piece of the e-payments jigsaw is regulations for payments that are transparent, easily understood and give sufficient peace of mind to all parties. There are three components of safety.
32 First, cyber-security. Financial institutions, including banks and payment providers, are required to put in place robust cyber defences so that customers can carry out online financial transactions with confidence. In the wake of the SingHealth breach two months ago, MAS has directed financial institutions to further tighten their customer identity verification measures.
33 Second, consumer protection when something goes wrong. Earlier this year, MAS issued a set of e-payments user protection guidelines for public consultation. MAS has reviewed the feedback and will be issuing the final guidelines at the end of this month. The guidelines do three things:
a. apportion liability for unauthorised transactions between financial institutions and users;
b. set out the duties of financial institutions and users for secure e-payment transactions; and
c. simplify error resolution processes when a user sends money to the wrong recipient.
34 Financial institutions are expected to provide timely payment transaction notifications to users. When a user sees that an unauthorised transaction has occurred, he should as quickly as possible notify his financial institution, which will investigate, assess and provide compensation where applicable, to claims in a timely manner.
35 Where the unauthorised transaction is caused by the financial institution, it will bear the entire loss. On the other hand, where a third party caused it, the financial institution will bear the loss where the transaction is below $1,000. Where the transaction is above $1,000, the financial institution will have to investigate the case further and decide on a case-by-case basis. This is because transactions above $1,000 require additional authentication and it is very unlikely that the user will be unaware of it, unless he did not take due care of his account.
36 In short, users who are careful and vigilant can be assured that they will be protected from unauthorised transactions. I hope that the guidelines reassure users that even when wrong payment transactions occur, as they may in all systems, the financial institutions will handle the matter in a fair, timely and responsible way.
37 Finally, safety is most dependent on good personal cyber hygiene. When it comes to our physical wallets, we will not carry too much physical cash in them, in case we lose our wallets. We should do the same for our e-wallets.
38 Keep only as much as you need in these e-wallets to make your everyday payments. After all, you can always top-up your e-wallet through your smart phone wherever you are if you run out of money. With broader access to FAST, this will be much easier for you to do.
39 For large value transactions, additional authentication through passwords and one-time PINs are required. They are like the additional lock on our front doors. Just as we keep the keys to our locks safe, we need to keep our passwords and one-time PINs tokens safe. And if we lose them, we should report this immediately to our financial institution.
40 In conclusion, we have been working to assemble the various pieces of the national e-payments infrastructure, starting with FAST as the first jigsaw piece in 2014.
41 We have taken some time to build up an open, accessible and inter-operable e-payments infrastructure which fosters competition, innovation and enhances consumer experience. SGQR is our latest feature, and we are developing the next piece in the national e-payments infrastructure through broader access to e-wallet players. But consumers will only use e-payments when they feel safe. We have put in a strong regulatory framework in the Payment Services Bill and e-payments user protection guidelines to ensure peace of mind for users.
42 Thank you all for coming together to build Singapore’s e-payments ecosystem.