Apple rolled out its mobile payment and digital wallet service here on Tuesday (April 19) but in a sign of a fragmented market taking shape, not all the major Singapore banks have come on board, with at least one bank throwing its weight behind Samsung’s payment system for now.

Apple Pay’s launch for American Express card users here comes ahead of Android Pay and Samsung Pay, both of which are also expected to launch in Singapore this year. DBS, UOB and Standard Chartered — the three participating banks so far — as well as credit card company VISA will introduce Apple Pay to their customers in the coming months, while companies already onboard include NTUC FairPrice, StarHub and Starbucks.

In February, it was reported that DBS, OCBC and Standard Chartered would offer Samsung Pay to their customers. TODAY understands that OCBC is working solely with Samsung on its payment system at the moment.

Mr Desmond Tan, OCBC’s head of group lifestyle financing, said: “With leading handset wallets being made available, we are exploring ways to encourage mobile payments by engaging our OCBC Cardmembers through a hassle-free and simple customer experience.” When contacted, both DBS and Standard Chartered did not comment on their discussions with Samsung.

Analysts said they expect further fragmentation in the mobile payments market. Last month, the Land Transport Authority announced that commuters will be able to use Near Field Communication (NFC) to pay for public transport. But this service would be available only on 19 Android models from three mobile phone makers, Samsung, LG and Sony.

Forrester researcher Ng Zhi Ying noted that consumers would benefit from a “digital wallet war”. “There will be an array of mobile payment players in the market, from the bank’s own mobile banking apps to the tech giants’ digital wallets,” she said. “With more players in the market, consumers stand to gain because these providers will compete to provide value beyond payments to their customers.”

In this war, brand loyalty could be key, said Associate Professor of Marketing Ang Swee Hoon at the NUS Business School. “If the iPhone is a lot more critical (to me), I will switch banks,” she said. “The transaction costs of switching banks – I would rather bear that – than the cost of switching from Apple to Samsung. It depends on which of these (companies) have the customer’s loyalty.”

E-wallets already in the Singapore market include DBS’ PayLah! and Dash, which was created by Standard Chartered and Singtel.

To use Apple Pay, consumers have to connect their credit or debit cards to a mobile wallet. Users then pay at stores by holding their iPhone, iPad or Apple Watch close to terminals with NFC technology. Singapore is the sixth country to get the service, after it was first launched in the United States in 2014.

Apple seeks to ensure users’ security and privacy by not storing credit or debit card numbers on the Apple device or servers. Instead, a unique number is assigned and encrypted to the device. Payments will be authorised using a one-time security code. Paying through the mobile phone also requires the customer’s finger print on the iPhone’s Touch ID sensor.

The analysts were split on whether Apple Pay could achieve mass adoption among consumers here.

Assistant Professor of Marketing Hannah Chang at the Lee Kong Chian School of Business at SMU noted that for the Apple Pay service to take off, more credit card companies, particularly those that dominate the market here, have to come onboard.

Dr Ernie Teo, a research fellow at the Sim Kee Boon Institute for Financial Economics, felt that Apple Pay would be able to gain a foothold in Singapore, as consumers get used to contactless payments. “Apple Pay would see a smoother adoption process and be able to ride on Visa’s efforts in raising awareness for contactless payments,” he said.

Assoc Prof Ang said it may take some time for consumers to fully embrace contactless payment. “It’s a different consumer behavior when it comes to purchases and it takes time for people to adapt,” she said.

iPhone user Joanne Chia, 36, who has signed up for Apple Pay, said she was keen to try the new feature. “With the physical card, there is a constant fear of people getting of our credit card numbers too. At least with (Apple Pay’s) Touch ID, even if we lose our device, the person won’t have our thumbprint,” she said. Still, she added that whether she would continue using the service depends on the number of participating merchants.

Without the need for NFC SIM cards, Apple Pay offers greater convenience to consumers, the analysts noted.

When contacted, StarHub and M1 declined to say how many NFC SIM cards they have sold. Nevertheless, M1 said that there is a “healthy take-up rate” while Starhub said the numbers have been “encouraging”. Singtel did not reply by press time.

Source:
courtesy of TODAY

by Asyraf Kamil And Raymond Tham

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