The payment industry is a fragmented one. In Singapore, there are more than 500 payment companies, with some providing just remittance services to major international or listed companies with multiple payment solutions.
The smaller payment companies often focus on just one or two payment solutions (e.g. QR code and/or POS machine for local eateries), limiting their scalability.
Bigger players have the advantage to scale and increasing the adoption rate among merchants. Still, because of an interest to protect their business, the solution is often that of a closed-loop ecosystem (e.g. customers can only use the specific provider’s e-money).
As a result, merchants often have to onboard with multiple payment companies if their business requires multiple payment solutions. This drives up their operation man-hours and costs, which eat up the already razor thin-margin that the merchants have.
Based on the ‘Singapore’s Payment Roadmap’ report, slow settlement speed, cost and security are the major concerns from merchants when it comes to payment solutions.
Understanding the struggles that merchants faced, payment companies nowadays are trying to provide more payment options for their merchants. Most are done via a partnership with other payment companies. This is often termed as Unified Payment 2.0 where payment solutions are unified within a single solution for merchants.
However, it still doesn’t resolve the pain points of having multiple platforms, given that most are done via a partnership with other payment companies, to manage and the slow settlement speed and cost, given that the payment method still revolves around fiat and the traditional settlement method.
Why is it popular
In order to reduce the transaction cost and improve settlement time, one might need to look outside of the traditional payment ecosystem. The existing payment ecosystem is heavily dependent on the conventional payment system which slows down the settlement time and is costly for merchants.
Also Read: Why smart businesses will prioritise smart payments acceptance
In order to solve the pain points for merchants, Digital Treasures Center (DTC), leverages blockchain technology to allow merchants to receive and settle in cryptocurrencies. With blockchain technology, the whole transaction is conducted in a decentralised manner and this helps to improve the settlement time for merchants.
The transaction will go directly to the merchants’ wallets and do not require a third party to perform any settlement for them. As a result, merchants can receive and transfer funds almost instantly. Generally, the transaction cost is lower than the traditional payment mode, when moving cryptocurrency.
Merchants can have peace of mind knowing that DTC is awarded the PCI-DSS Level 1, which is the highest standard for a payment company. Crypto assets received by the merchants are secured by a hardware security module that is state-of-the-art technology.
FIPS 140-2 Level 3 HSM has tamper-evident physical security mechanisms and prevents the intruder with the ability to zero-rise data if an intrusion is detected, rendering all the data in the drive useless to an attacker. For merchants, it gives them the peace of mind that their assets are safe and secure.
Scalability of payment 3.0
At DTC, merchants can experience a unified payment solution, as DTC has obtained the in-principle approval for six of the activities under the Payment Services Act by the Monetary Authority of Singapore (MAS).
This means that merchants can opt for different payment methods (e.g. QR code, e-money, POS, online payment, credit card, cryptocurrency, etc) based on their business needs. All within the same platform.
This allows merchants to better manage and track their funds’ flow to help them improve productivity and reduce overhead costs. Merchants can have the flexibility to mix and use different payment modes in a transaction.
For example, merchants can receive payment from their customers in SGD via online payment, but convert within the DTC dashboard to crypto-assets and send it to their suppliers overseas as payment for goods received. This allowed the merchants to leverage the best transfer methods to reduce the transaction and settlement costs.
With the flexibility to switch and choose a different mode of payment, this could be the start of the revolution in the payment industry or in what we might see as the rise of payment 3.0, where merchants are empowered to choose crypto, cash (fiat), and card all within one platform.
This article was first published on April 6, 2022.
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