Three Brides for Three Grooms

(for MediaCorp 938LIVE’s Money Talks on 12 July 2007)

If you leave home without your phone, would you go back and get it? Yes. Most of us would. But if you leave home without your wallet, would you go back and get it? This time, studies show that only some of us would.

Studies also show that we are twice as likely to carry our mobiles as we are to carry our wallets. Logic says that we should combine the two together.

The attraction is that so many of us, even children, now own mobile phones. Does this mobile and wallet combination exist? “Yes”. But not yet in Singapore.

Outside Singapore, a few such mobile and wallet combinations, also known as mobile payment systems, are currently being tested. In Japan, you can use your mobile to buy a train ticket, pick up a newspaper and grab a cup of coffee with just a wave of your mobile across a scanning device.

Japan’s mobile payment system does not depend on cutting-edge technology. It’s the same technology we already use in our EZLink cards.

But mobiles can be more than just another EZLink device. Using the screen and keyboard, mobiles can also be used to authorise larger payments by entering PIN codes. In its developed form, it could be used as a credit card and to transfer money between bank accounts.

Test runs in Kenya and South Africa, where most people do not have traditional bank accounts, have so far proved very successful.

To send and receive money, all you need is a secret code, the SMS facility, a virtual bank account, and registered agents on both sides.

When such a mobile payment system is introduced in Singapore, and the commissions are low enough, many retailers will embrace it. This could undermine the profits of existing electronic payment systems.

The introduction of a mobile payment system into any country is normally seen as a threat to the banks. Banks could lose customers if payments made by mobiles do not appear on their monthly bank statements, but on those of the telcos.

In theory, telcos could evolve into banks. But telcos might not want to deal with large financial transactions. It would also require telcos to take on risk management and offer banking services. They might not want to do that too.

But if telcos are happy to do it, and banking licences are given to them, imagine the impact on the stock prices of banks and telcos. In this new scenario, many permutations are possible. Telcos could compete or team up with banks.

So the next wave of merger activity in the Singapore banking scene may not be between banks. Looking at the lighter side of it, it could be the ideal marriage between three grooms and three brides. The three grooms are the banks, because, traditionally, they have the money. And the three brides are the telcos, because, traditionally, they love to talk.

Jokes aside, a mobile payment system would give the Singapore economy another cutting-edge advantage. But it has its downsides too. What is good for one may not be good for all.

For instance, an outlaw fleeing the country would be able to transfer millions of dollars in an instant, just by using his mobile and PIN code. But the public might not want him to do that. At least, with a mobile payment system, the outlaw could transfer the money himself, and not involve any of his relatives. This would spare his relatives the inconvenience of facing a potential jail term.