Becoming a smart nation with digital payments

By Ashwin Hemmathagama

The advancement of technology and the increasingly widening broadband use contributed immensely to reduce the size of the earth; even though it is not a geographical size reduction, but a reduction in terms of connectivity, which enables to connect with the other part of the world within a second or less by breaking the traditional barriers of communication and trade.

Regardless of the size, any business of modern-day is unable to keep away from this growth, which includes banking, finance and trade at some degree. The online presence and the ability to perform online purchase, transactions and make payments widely known as eCommerce are based on platforms capable of conveying secured messages between the consumer and the intended destination. Online payment is the best way settling payments for various purposes, including simple day-to-day tasks such as utility payments to transferring funds to settle purchase products or services. There are various systems and complex processes involved in the online payment cycle, even though for the user it may take a few seconds to complete the payment.

However, a national payment platform (NPP) is not a mode of payment system, but capable of sending out a digital request to the intended institute or the person who wishes to send a secured digital transaction to the other. Although the process looks simple, NPP is capable of accommodating payment requests for Government to Government (G2G), Government to Business (G2B), Government to Citizen (G2C), Business to Business (B2B), Business to Customer (B2C), or between a Citizen to Citizen (C2C), this would use the internet to send a message using a secured, authenticated and encrypted channel between the recipient and receiver. 

By sending a message with an invoice and providing payment detail, sending of receipts for concluding transactions between two people, sending for a good refund, requesting for payment transaction status are a few of the common elements of an NPP, which will not support the direct debiting or crediting of bank accounts of its users or directly updating or maintaining accounts held at financial institutions of the user. All-in-all the NPP could be easily identified as a messaging platform for facilitating secured messaging for digital commerce.

According to industry experts, the need for instant access to value is consistently underlined by customer research studies where the rising number of immediate payments infrastructures being set up and operated around the world. From the UK to Singapore, from Australia to the USA, immediate payments are either already available or being planned. The momentum is unstoppable – and growing. Countries’ increased adoption of immediate payments infrastructure reflects the significant benefits immediate payments can deliver to end-users. Governments gain advantages ranging from reduced cash and check handling to easier management of economic risks. Businesses can pay employees and suppliers faster, have funds available quickly, and gain access to rich payments data. Consumers stand to benefit most, with convenient, 24x7 availability, a compelling end-to-end payment experience, and ideally, immediate access to valuables.

Singapore now identified as a Smart Nation, is the financial heart of Asia, according to a recent report published by the KPMG. Given Singapore’s financial strength and stability, coupled with its strategic location, the country has grown to become a leading global financial centre, with a major role in regional and international payments. Payment flows between individuals and businesses in Singapore are substantial. As a major trading hub, trade finance centre, and gateway for investments in Asia, there is an even larger volume of international payment flows. Companies based in Singapore have an international orientation, so payments by means of cross-border transfers will only gain more importance. Further, Singapore also consistently ranks as a top five world travel destination, and its payment systems serve millions of visitors each year, making interoperability and ease of access essential to global travellers.

Accounting for these factors, the accomplishment of the Smart Nation Vision is vital to Singapore’s continued role as a centrepiece of the regional economy. Integrating technological innovations in telecommunications with advanced data and analytics to improve the lives of its citizens and businesses across the country, Singapore is poised to become a leading Smart Nation. The Monetary Authority of Singapore (MAS) has the opportunity to underpin the realisation of the Smart Nation Vision by engineering the development of a world leading payments ecosystem, according to KPMG. In Singapore, the payment systems of the future are characterised by a transition from paper-based instruments to electronic platforms, infrastructure that promote interoperability, efficiency and security, and a ubiquitous user experience that cuts across market segments and demographics.