The e-commerce industry in Singapore has been experiencing robust growth, driven by factors such as high internet connectivity, widespread smartphone penetration, and a well-developed payment infrastructure. Moreover, the COVID-19 pandemic has significantly accelerated the shift in consumer preference from traditional brick-and-mortar stores to online channels. In this article, we will delve into the evolving e-commerce payment landscape in Singapore, particularly the rise of alternative payment solutions and their potential to challenge the dominance of traditional payment cards.
Dominance of payment cards
Payment cards have traditionally held a significant share in e-commerce transactions, accounting for 40.1% of the total e-commerce payment value in 2023. This dominance can be attributed to the familiarity and ease of use associated with payment cards in Singapore.
Rise of alternative payment methods
Alternative payment methods, including popular brands such as Apple Pay, PayPal, and Google Pay, have gained substantial traction in recent years. Collectively, they account for a 38.6% share of the e-commerce payment value in 2023, up from 27.6% in 2020. The increasing adoption of alternative payment methods is driven by their convenience, security, and seamless integration with mobile devices.
ShopeePay’s voucher offerings
ShopeePay, a leading alternative payment provider, entices customers by offering various pricing benefits. Customers can avail themselves of cashback, sometimes as high as 80%, at partner merchants. Additionally, ShopeePay provides reward points and free shipping, making it an attractive option for e-commerce shoppers in Singapore.
Citing the attractiveness of alternative payments to customers, alternative payment providers understand the importance of offering pricing benefits to encourage frequent use. By providing incentives such as discounts, cashback, and rewards, these providers are able to attract a growing customer base and establish themselves as viable alternatives to traditional payment cards.
Growth of buy now, pay later (BNPL) solutions
One of the key drivers behind the growth of alternative payment solutions is the rising popularity of buy now, pay later (BNPL) solutions, especially among the millennial demographic. Younger consumers prefer the flexibility and convenience of paying for their purchases in interest-free installments.
Prominent BNPL brands in Singapore
Singapore has witnessed the emergence of prominent BNPL brands such as Hoolah, Rely, and Atome, which offer consumers the flexibility to spread out their payments without incurring interest charges. These brands have gained a significant market share and are reshaping the e-commerce payment landscape. In June 2023, Apple introduced its own BNPL solution called Apple Pay Later in Singapore. This innovative payment option allows users to pay for their online and in-store purchases in interest-free installments, further fueling the adoption of alternative payment methods.
The growing popularity among millennials
The rising popularity of alternative payment solutions, particularly BNPL options, is expected to further accelerate the shift away from payment cards. With millennials increasingly embracing alternative payment methods, traditional payment cards may face challenges in maintaining their dominance in the e-commerce payment space.
Potential acceleration of the shift away from payment cards
As alternative payment solutions continuously improve and offer more compelling benefits to consumers, they are poised to challenge the traditional payment card infrastructure. Their convenience, security, and other value-added features make them an attractive choice for digitally savvy consumers.
The e-commerce payment landscape in Singapore is undergoing a significant transformation, with alternative payment solutions gaining momentum. The rising adoption of these methods, combined with the attractive pricing benefits they offer, is reshaping consumers’ online purchasing habits. With the emergence of buy now, pay later options and the growing popularity of brands such as ShopeePay, Hoolah, Rely, and Atome, the dominance of payment cards in e-commerce transactions may soon be challenged. As alternative payment solutions continue to evolve, they are poised to shape the future of e-commerce payments in Singapore.