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Cashless Payments: The new norm for SMEs in Asia

online payments

Online Paying, payment, invoice. Financial accounting

A digital tsunami is heading for Asia. With clients moving to digital only advertising, blockchain looming and cryptocurrencies in the news daily, cashless payments for digital services, recorded digitally, are becoming the new norm across Asia and it is a matter of time before SMEs will have to follow suit.

Going Cashless

Digital payments, also known as ‘going cashless’ are still known unknowns to many Asians so it is key for SME owners to understand what it means. Traditionally, payments are made using payment instruments such as cash and cheques. Digital payments are not one instrument but rather an umbrella term applied to a range of different instruments used in different ways. There are various types of digital payment that enable cashless purchases for consumers;

  • E-wallets
  • Internet banking
  • Electronic fund transfers
  • Electronic cash systems
  • Online stored value systems

Digital Tsunami

Paying for goods and services digitally is being adopted at different rates across Asia.

Singapore is making a concerted push to go cashless, but for many SMEs cash is still king. Adopting e-payments can be costly especially for SMEs and in Singapore, unlike in other Asian countries such as China, cashless payments have not yet become a part of everyday life. One key issue is the variety of e-payment solutions available, interoperability has become an obstacle as systems are not fully integrated and this has slowed down the pace of adoption. According to a recent study by online payments service provider PayPal, 90% of respondents still prefer cash as their primary mode of payment, compared with the regional average of 88%.

In Malaysia, by comparison, another study done by Nielsen showed that only 34% of respondents use their mobile device to purchase a product or service. The slow take up rate of digital payment could be due to safety concerns. Cash is already pretty much dead in China as the country lives the future with mobile pay with mainland Chinese stores and services are increasingly centered on mobile pay apps like WeChat Pay and Alipay. Chinese mobile payment volume was more than $6 trillion in 2017. In Beijing, a chicken rice shop, souvenir store and seller of Traditional Chinese Medicines all had signs saying they accept mobile pay. Lack of red tape and a less developed financial system have allowed mainland China to leapfrog the developed world into embracing mobile payments.

Costs for SMEs

Looking at the bottom-line, what does this mean for SMEs?  The costs of adopting e-payments ranks high among reasons cash is still preferred by many SMEs but how long can this last?

For merchants, fees charged by credit card companies are a key drawback to adopting cashless payments. A transaction fee of about 3% is imposed on merchants for accepting Visa and MasterCard payments. Similar fees apply when they accept mobile wallets such as Apple Pay, Android Pay and Samsung Pay which are layered on the existing credit card infrastructure. Singapore’s most extensive e-payment network, Nets charges merchants a transaction fee of about 1%. The European Union, for instance, introduced a rule in December 2015 where merchants cannot be charged more than 0.3 per cent for accepting credit cards, and 0.2% for debit cards.

However, at one large retail chain in Singapore, the cost of accepting cashless payments at its outlets is still three times higher than the cost of accepting cash. One SME owner also commented, “accepting credit cards does not make sense as the company’s prices do not justify the costs,” adding, “In our various stores where most items sell for from $10 to $15, I don’t mind using Nets as the fee is less than 1% and it’s convenient.” Mr Rahul Shinghal, who is PayPal’s General Manager of SE Asia emphasizes that “cash has a huge cost for the economy, government and consumers as well as businesses. Singapore spends upwards of $2 billion in managing cash and cheques. Every percentage point increase in cashless payments benefits everybody”.

PayPal your cashless friend

As an SME owner one option to pay for items and services and track your spending is with PayPal. For a personal account, there are no transaction fees for payments sent through PayPal balance and eChecks. eChecks is a type of electronic payment made by using your bank account. The Buyer Protection feature from PayPal is an added bonus if anything goes wrong with your transactions. It covers the customer in any instances that might put you in an unfair position. If you were charged for something you didn’t purchase or even if your purchase didn’t arrive or it doesn’t match what was described by the seller, you can then get a full reimbursement.

ABSS connecting SMEs through PayPal

Get paid easier and faster. Collect debts directly from invoice with PayPal.

How it works:

  • Sign up for your PayPal business account
  • Set up your PayPal business account in the ABSS software
  • Create an invoice with PayPal Now and PayPal button
  • Customers can now pay you online via PayPal
  • Receive payment instantly from customers

210 million buyers worldwide and 6 million Australian buyers using 25 currencies must be on to something!

Benefits: Providing an easy pay option. Debt collection made easy

Provide your clients the option for an easy payment method with ABSS and PayPal. No set-up or maintenance fees and you only pay for what you use. This means your SME business can;

  • Get paid faster – your customer can pay in just a few clicks directly from your invoice
  • Get paid everywhere – accept payment from anywhere in the world in the currency of your choice
  • Secure payment – your eligible sales can be protected against unauthorised payments with PayPal Seller Protection
  • No Maintenance Costs – no monthly fees and only pay as you use with PayPal transaction fees
  • Automated & Saves Time – direct integration with your ABSS account Software and PayPal account
  • Improve Cash Flow – get paid immediately and minimize outstanding invoices
  • Meet Expectations – provide online payment methods via credit or debit cards
  • Hassle Free Set Up – no costly set up and no IT knowledge required

SMEs who have not yet gone cashless might risk losing out on “casual sales”, purchasing decisions made on the spur of the moment. Whatever the reason, try going cashless and why not try out ABSS’ new PayPal connectivity to make your SME business faster, more secure and easier.

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Paul Conway
Paul Conway
My role as CEO is to take the business to the next stage of growth. I already have a fantastic and growing team. There are opportunities with payments, banking channels, additional software, cloud deployment and with over 300,000 customers in South East Asia and a publicly listed majority shareholder in Censof holdings, the opportunity and tools for growth are very real.

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