Xero’s new report reveals Singapore’s growing trend towards digital payments, especially among younger generations. Learn how small businesses can adapt to these changing preferences.
New research by global small business platform Xero reveals that Singapore’s younger consumers are leading the shift to digital payments. In contrast, more than half of small businesses in the country do not currently provide cash payment options.
Launched today, Xero’s new report, ‘I want to pay that way‘, delved into changing consumer payment habits and how small businesses adapt.
Digital payment technology is rapidly growing in Singapore
The survey findings reveal a growing trend towards digital payments in Singapore, driven by strong government support and initiatives to build a digitally connected society.
Over three-quarters of Singapore consumers (76%) use credit or debit cards for payments. More than half of the population utilizes the funds transfer service PayNow (55%) or bank transfers (55%). About a fifth of them also use the e-wallet service GrabPay (22%) and buy now, pay later platforms (21%). Reflecting changing perspectives, the research showed that 30% of Singapore consumers only carry their mobile phones to pay when shopping, notably higher than the global average of 21%.
Younger generations are leading the way, quickly embracing new digital payment methods. PayNow is the preferred digital payment method for 68% of Gen Z consumers in Singapore, with about a third (29%) also using GrabPay.
“Singapore is at the forefront of building a robust digital payment landscape, aligning with its broader digital economy and Smart Nation goals. While a supportive regulatory environment and complementary initiatives are driving digital payment development and adoption among Singapore’s small businesses and consumers, targeted support to help small businesses adopt more payment options will also be crucial,” Koren Wines, Managing Director, Asia, Xero said.
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Disconnect in customer payment preferences and payment options small businesses offer
The findings also highlight that failing to meet consumer payment preferences can directly impact customer retention and revenue. Approximately 18% of Singapore consumers indicated they would visit another business that accepts more payment options if a business didn’t offer at least one of their preferred payment methods.
Despite trends indicating a shift towards a cashless society, physical currency remains a preferred payment method for many of Singapore’s population. Nearly eight in ten (79%) Singapore consumers use it for transactions, highlighting its prevalence in everyday life. However, half (51%) of local small businesses no longer offer it as a payment option, making small businesses in Singapore the least likely among the countries surveyed to accept cash payments despite having the highest proportion of consumers who opt for this traditional method.
Benefits from new payment methods boost small business confidence to try new tech
Nearly nine in ten (87%) small businesses in Singapore say they have benefited from adopting new payment methods in the last six to twelve months. Key reported advantages include reduced time to be paid (43%), retaining more business (42%), and increased sales (41%).
Many small businesses in Singapore are optimistic about future or emerging payment methods. These include biometric authentication methods such as fingerprints or facial scanning (36%), bartering marketplaces/apps (33%), and augmented reality (33%). About a third (31%) have expressed excitement about implantable payment chips, a much higher figure than small businesses in countries like Australia (7%) and New Zealand (9%) included in the research.
As a commitment to delivering on its business strategy, Xero is building payment solutions to make it easier for small businesses to make and collect payments more seamlessly, while helping them to maintain a healthy cash flow.
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Bharathi Ramavarjula, SVP of Payments, Xero, said: “Understanding how different consumers prefer to pay and giving them the flexibility to pay the way they want, will help small businesses get paid faster and grow their revenue. To make it easier to collect payments, Xero is providing small businesses with more ways to get paid.”
To download the full report, click here.
