Singapore plans to reduce the role of cash and checks in its economy by encouraging banks to switch to digital payments, according to the head of the country’s central bank.
“For consumers, the use of cash for daily payments is high,” Ravi Menon, managing director of the Monetary Authority of Singapore, said at a financial technology conference on Friday. "For businesses, the use of checks is relatively high too.”
Menon said cash in circulation in Singapore is the equivalent of 8.8 percent of gross domestic product, compared to just over 2 percent in Sweden. An average of 12.7 checks were written per person in Singapore in 2014, compared with practically none in Sweden, he added. This costs Singapore about S$2 billion ($1.5 billion) per year, mostly for storage and processing, which Menon described as a "non-trivial" amount.
Singapore is aiming to be a hub for the financial technology industry in Asia, in an attempt to bolster its economy, create jobs and cement its position as a regional banking center.
Menon said the MAS is asking the country’s banks to pass on to their customers the full cost of paper-intensive services, such as the processing of checks, to encourage them to switch to digital payments. The MAS also wants to see a majority of those transactions made using cellphones, or national ID or other secure numbers, rather than bank account numbers, over the next year, Menon said.
Singapore, along with Finland, the U.S., Sweden and the U.K., are the economies that are most ready to use digital payments, based on the high use of mobile phones and banking services, according to a Citigroup Inc. report published in June. Apple Inc. introduced its mobile payment service Apple Pay in Singapore in April. Samsung Electronics Co. followed with its own service two months later.