DBS reaping success of cashless drive

The cashless drive by DBS is bearing fruit. Singapore's largest bank and biggest card issuer has seen a sustained decline in ATM cash transactions over the past one year and is now also expecting a five-time boost for its mobile wallet volume over two years.

Even as its customer base continues to grow, the average monthly transactions on cash dispensing machines have fallen by 400,000, said DBS - an unprecedented data trend. Over the same period, non-cash transactions has jumped by 800,000 in monthly average transactions.

The cashless drive is in line with Singapore's move to reduce the amount of cash in circulation, and to build a smart financial centre, said Anthony Seow, head of unsecured loans and cards at DBS Bank, at a media briefing on Thursday.

And the cost relating to this cashless drive is "nothing compared to the savings", said Mr Seow, noting that cash handling is inefficient for banks, and merchants.

DBS is not reducing its ATM network at this point but, as it is, tellers at branches use machines to reduce the amount of cash that needs to be reconciled.

This turns up productivity levels at branches, as staff are being moved to provide more high-value services such as advice. Branch transactions at DBS cost about 50 times that of an online transaction.

"One day if no one wants to go to ATMs, there's no point having them," said Mr Seow. "But there's no on-off switch. We still have some way to go...and as a developed country, we are a bit behind in terms of cashless."

This comes on the back of the wider launch of Apple Pay in Singapore recently, with the three Singapore banks and Standard Chartered now offering the service together with American Express.

DBS, which says it is the largest card issuer in Singapore, has had more than 47,000 cards provisioned for Apple Pay in the first two weeks. Through provisioning, customers have their card number replaced with a unique digital number - known as a token - allowing for the digital version of their card to be used via their Apple wallet. Merchants only see this token, which cuts the odds of card details getting stolen from merchants.

Earlier this week, UOB told BT that it is the largest Visa-card issuer, with about 19,000 of its cards enabled over the same period. But it loses out to DBS, which has a significant number of MasterCard-issued cards.

OCBC separately told BT that close to 40,000 of its cards have been provisioned for Apple Pay. Standard Chartered declined to provide numbers.

DBS, with its pole position, now has close to five million cards in circulation. For perspective, there were in all about 9.5 million credit cards - including supplementary cards - circulating in Singapore as at April, data from the central bank showed.

DBS now expects mobile wallet volume to grow more than five times by 2018, and for that to contribute to approximately 80 per cent of its contactless volume by 2020. Its own DBS PayLah! wallet is the fastest-growing personal mobile wallet here, it said.

It will launch Android Pay, on top of Samsung Pay, soon. And as it is, DBS is seeing strong traction from Apple Pay: Apple Pay credit card users averaged three contactless transactions per week compared to two per week prior to Apple Pay adoption.

Volume of contactless spending for Apple Pay credit card users also doubled, on average, compared to the typical spending over a similar period before Apple Pay came about.

"We are seeing very strong momentum," said Mr Seow, noting that seven in 10 transactions at supermarkets are now contactless. More transactions could be captured at quick-serve restaurants in time, too.

The bank wants to raise the contactless transaction limit to beyond S$100 by mid-2017. By then, consumers should be able to make payments of any amount without having to swipe their cards. They will be alerted to sign on transactions above S$200.

Separately, DBS has a pipeline of merchants signing up for its DBS FasTrack, and expects to hit 200 retail outlets by the end of the year.

The app links food and beverage (F&B) business operators with their customers. The customers place orders and make payment to the F&B outlets through a DBS or POSB card, before picking up the orders at a specified time.

Card details would be saved in the app, as is the case with most apps that facilitate payment, such as Uber. In the two weeks since launch, the app for local beverage chain, Old Tea Hut, has helped to boost sales by more than 10 per cent at the Marina Bay Link Mall outlet, without adding manpower.

Singapore's total currency in circulation translated into about 8 per cent of GDP in 2012. As a comparison, in Sweden - reportedly ranked first in the European Union for card payments in 2012 - cash represented 2.9 per cent of its GDP in 2010.

leejamie@sph.com.sg

This article was first published on June 10, 2016.
Get The Business Times for more stories.