Making payments overseas: Cash may still be king but e-payments are catching on

Check out the full Straits Times feature here

SINGAPORE – Digital payments may be catching on around the world, but Milieu Insight's latest study has found that 56% of people in Singapore use cash most often when making payments overseas.

Their main concerns are bank charges levied on overseas spending, and security risks such as malware and data breaches.

It is not just older folks who prefer physical currency. Even digital natives aged 16 to 24 say it helps them stick to a budget, with two-thirds of them – higher than the national average – making cash their top choice.

These are some of the findings from a study conducted in May for The Straits Times by market research firm Milieu Insight, which polled 1,000 respondents in Singapore.

More people turned to cashless payments in countries such as Australia and the United States, compared with neighbouring Vietnam, Thailand and the Philippines.

Frequent flier Koo Sok Mien, 43, who travels about once every two months for work, sticks to cash in countries such as Thailand, where she believes fintech developments are less advanced.

A close shave with credit card fraud in 2022 has also made her cautious.

After returning from a trip to Amsterdam, she realised multiple charges were still being made on her card, which she immediately cancelled and reported.

“Somehow, my details had been stolen while I was there. If I return to Amsterdam, I would be more inclined to use cash,” says Ms Koo, who is the Asia-Pacific business development and marketing vice-president for a robotics company.

But she uses bank-issued credit cards in countries such as Japan and Australia, where e-payments are common. Her pick is Citibank’s PremierMiles card, which she uses to accrue KrisFlyer miles.

Her spending habits are in line with those aged 35 to 54, who favour bank-issued credit cards for their convenience, as well as collecting air miles or cashback.

Meanwhile, consumers aged between 25 and 34 lean towards digital multi-currency accounts offered by YouTrip, Wise and Revolut. These tout lower foreign exchange rates and charge minimal to no currency conversion fees.

In comparison, DBS charges up to 3.25% for transactions made overseas or through overseas-based online merchants.

Fintech companies say they have no less stringent security measures compared with banks, such as two-factor authentication for logins and round-the-clock monitoring for suspicious activity.

YouTrip co-founder and chief executive Caecilia Chu says: “We noticed that user education is most effective when people are alerted to unusual activity, such as multiple low-value transactions during a short time frame. This allows us to provide users with tips on fraud prevention when we check in with them to verify the transactions.”

As more countries embrace cashless payments, customers will be nudged towards making the shift.

On a trip to South Korea in May, recruiter Sunny Lo, 27, mostly used the American Express Singapore Airlines KrisFlyer credit card and found that even small retailers were going cashless.

“Many places in Busan and Seoul preferred e-payments and some were reluctant to take cash or had difficulty coming up with change,” she says.

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Methodology

Based on a Milieu Insight survey with N=1,000 respondents in Singapore, conducted on 10-15 May 2023. 

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