SINGAPORE - UOB, which has the most number of credit and debit cards in circulation in Singapore, expects mobile contactless transactions to account for 10 per cent of all its card billings by 2020, on the back of swift adoption of Apple Pay and as Singapore is likely to move towards using credit and debit cards for daily commuting, said a top executive at the bank on Monday.
About 19,000 cards from UOB have been enabled for Apple Pay in just two weeks, UOB told The Business Times. This is understood to rank UOB as top in tokenisation for Apple Pay. Citibank, another large credit card player, has not offered Apple Pay yet. There were about 9.5 million credit cards - including supplementary cards - circulating here as at April, data from the central bank showed.
UOB was first, and remains, for now, among the few banks that offers mobile contactless payment options on both iOS and Android devices. In November, the bank offered contactless payment on Android phones that have near-field communication capabilities. In about six months, the bank raked up about 16,000 cards tokenised via the app, UOB Mighty.
Dennis Khoo, head of personal financial services, Singapore, UOB, sees an all-out assault as the best way to aggregate spending and payments on phones, and expects Singapore to move towards what is seen in Britain, where the introduction of contactless payment on buses and trains in 2014 led to a more than trebling in contactless payments in the UK. Data from Visa Europe was reported in January to show contactless readers in UK are being used in one in seven sales, up significantly from one in 25 a year ago.
"Singapore is likely to move into this direction," Mr Khoo told BT. "We see this as a very big catalyst."
The Land Transport Authority will pilot this year the use of contactless debit or credit cards for commuting.
As it is, Singapore is ranked third in the world with the widest adoption of Visa payWave - Visa's contactless payment service - after Australia and New Zealand. Transaction volume has jumped close to 70 per cent from a year ago for contactless payments through Visa-issued cards, Visa data has shown.
Mr Khoo said that the use of tokens has made credit-card transactions more secure. Users must verify mobile contactless transactions using either their thumbprint, or a PIN.
More importantly, the card numbers are not shared by Apple with the merchants. A tokenisation process replaces the card number with a unique digital number, known as a token, Visa told BT in a recent media briefing. Merchants only see this token, not customers' credit card number, which limits the odds of credit card details stolen from merchants.
If a phone is stolen, consumers need only call their banks to cancel the token, so mobile contactless payments on that phone can no longer be be made. And because the card details were not revealed, consumers can continue to keep the same card on hand, and enable it for use on a new phone later, using a new token.
Contactless transactions are still small in value, including purchases at supermarkets and convenience stores, UOB data showed. UOB will lift the S$100 limit for all mobile contactless payments made on UOB contactless readers, Mr Khoo told BT. All 10,000 UOB terminals, up from 2,000 now, will have the limit lifted for mobile contactless payments for all cards by end-2017.
UOB joined DBS, OCBC and Standard Chartered Bank in enabling Apple Pay transactions in May. Apple Pay is also available for American Express-issued cards. Citibank, DBS, OCBC and StanChart will provide Samsung Pay for their cards, soon.
Samsung is reportedly charging no fee on banks. Apple is said to have charged 0.15 per cent per transaction on cards issued by US banks, and 0.07 per cent of each transaction on cards issued by Chinese lenders.
This article was first published on June 07, 2016.
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