Alternative payment methods such as mobile and digital wallets are being widely used in the e-commerce space in Singapore, accounting for 38.6% of online payments made in 2023, a GlobalData report has revealed.
The report forecasts Singapore’s e-commerce market to grow by 15% to reach SGD19.8 billion ($14.8 billion) in 2023. It grew by 17% in 2022.
According to Kartik Challa, Senior Banking and Payments Analyst at GlobalData, “E-Commerce sales in Singapore are growing at a robust pace, supported by high internet connectivity and smartphone penetration, and well-developed payment infrastructure. The COVID-19 pandemic has accelerated this shift in consumer preference from brick-and-mortar to online channels.”
In terms of payment tool preference, e-commerce payments in Singapore are traditionally led by payment cards accounting for a 40.1% share in the total e-commerce payment value in 2023, according to the GlobalData’s 2023 Financial Services Consumer Survey. This is due to the value-added benefits, including interest free instalment payment options, reward programs, cashback, and discounts associated with these cards.
Challa adds: “While payments cards traditionally remain the preferred choice for e-commerce payments, alternative payments are increasingly gaining prominence with their collective share catching up with payment cards. Alternative payments collectively account for a 38.6% share in 2023 – up from 27.6% in 2020, with some of the popular brands being Apple Pay, PayPal, and Google Pay.”
Alternative payment providers are also enticing customers by offering them pricing benefits to encourage frequent use. For instance, ShopeePay offers vouchers to its customers offering them cashback as high as 80% at partner merchants, along with other benefits such as reward point, and free shipping.
The growth of alternative payments has also been driven by the rising popularity of buy now, pay later (BNPL) solutions. Some prominent BNPL brands include Hoolah, Rely, and Atome. To capitalise on this trend, Apple introduced its BNPL solution called Apple Pay Later in June, allowing users to pay for their online and in-store purchases in interest-free instalments.
Challa concludes: “The growing popularity of alternative payment solutions, especially among the millennials, is expected to further accelerate the shift away from payment cards, and these solutions are all set to challenge the dominance of payment cards going forward.”
