PayNow and QR adoption accelerate, with 68% of Gen Z preferring instant transfers over cards.

The Cost of Card Acceptance in Singapore

Singapore's merchants face the highest merchant discount rates among their ASEAN peers, creating a persistent structural incentive to shift payment acceptance away from card rails. According to a 2021 estimate cited by the Monetary Authority of Singapore (MAS), merchant discount rates — the total cost borne by merchants per transaction, including interchange fees — are elevated compared to regional neighbours, with payments income as a share of total bank revenue also leading the region (Source 6). Cards operate within a global scheme framework that layers multiple fees on each transaction: scheme fees, acquiring fees, and, for cross-border collections, embedded FX spreads that are often not itemised separately in acquiring agreements (Source 2).

The cost burden exists alongside declining consumer reliance on cards for basic transactions. Debit and prepaid cards accounted for only 5% of e-commerce and 9% of point-of-sale (POS) transaction value in 2024, down from 9% and 12% respectively in 2014, based on WorldPay figures cited by Sumsub (Source 7). By 2030, these shares are projected to fall further to 3% and 5%. As merchants confront persistent margin pressure from high acceptance costs and a shrinking domestic card-paying base, the business case for seeking alternative rails grows stronger.

Share of transaction value (%) (%)Source: Orionmano Industries

A2A Infrastructure Gains Critical Mass

Singapore's account-to-account (A2A) payment infrastructure has matured to the point where it offers a direct technical and economic substitute for card acceptance for domestic transactions. PayNow, the real-time A2A system operated by the Association of Banks in Singapore, enables instant transfers using simple identifiers — a mobile number, NRIC, or business UEN — bypassing the card scheme layer entirely (Source 4). These are "push" payments initiated by the payer, which structurally reduces dispute risk; merchants face no chargeback exposure, and settlement is immediate rather than delayed by card clearing cycles (Source 2).

For finance teams, the operational implications are clear. A2A payments provide stronger settlement visibility and working capital certainty than card flows, removing the reconciliation overhead associated with chargeback management (Source 2). On the acceptance side, MAS piloted the improved "SGQR+" open-loop QR code system in late 2023, designed to simplify merchant setup and allow payment interoperability across multiple schemes through a single QR code (Source 2). The combination of PayNow, the FAST interbank transfer system, and SGQR means that even small merchants and hawker stalls can accept digital payments with no terminal hardware beyond a printed QR code.

The infrastructure shift is also attracting significant investment. Banks and fintechs across Asia Pacific are investing in flexible and scalable payment infrastructure to support emerging payment models and adapt to changing customer expectations, recognising that the next phase of payments growth in the region will be built on rails beyond traditional cards (Source 5).

Consumer Behaviour Accelerates the Shift

Demand-side preferences, particularly among younger Singaporeans, are reinforcing the merchant migration from cards to A2A and wallet-based payments. Among Singapore's Generation Z, 68% prefer PayNow as their payment method, and 22% use GrabPay, reflecting strong adoption of both A2A transfers and digital wallets (Sources 2, 4). This generational tilt is reshaping the consumer payment mix at scale.

Digital wallets accounted for approximately 29% of POS transaction value in 2024, compared with roughly 1% a decade earlier in 2014 (Source 4). Cash usage has correspondingly collapsed: only 13% of POS transactions used cash in 2024, a share forecast to fall to 8% by 2030 (Source 7). For e-commerce, cash is already negligible at 1% of sales. As Generation Z and younger millennials move through their peak spending years, their preference for instant, fee-free A2A transfers over card payments will continue to compress the addressable market for domestic card transactions.

Implications for Merchants and the Payments Landscape

The structural reorientation away from card-centric payment acceptance carries significant implications for merchant strategy and the broader payments ecosystem. Payment failures — including rejected transactions, timeouts, and insufficient approvals — cost Singapore merchants an estimated S$12 billion annually, according to Payoneer data cited by Asian Banking & Finance (Source 3). The reliability of A2A rails, which settle in real-time with no chargeback mechanism, directly addresses this failure cost by removing the settlement uncertainty inherent in card authorisations.

For merchants, the calculus is shifting toward a diversified acceptance strategy. Cards remain essential for cross-border and tourism-facing businesses — the global scheme acceptance network removes friction for international buyers. However, cards are poorly suited for supplier payments, B2B transactions, and high-volume low-value domestic sales, where transfer speed and reconciliation matter more than consumer convenience (Source 4). The share of domestic transactions processed via cards is contracting, and forward-looking merchants are rebalancing their payment mix toward A2A and wallet-based methods.

For issuers and acquirers, the outlook suggests further erosion of card interchange revenue in domestic markets. As consumer and merchant adoption of A2A rails deepens, institutions that have relied on interchange income will need to reposition their value propositions toward value-added services — data analytics, fraud management, working capital financing, and integrated point-of-sale software — rather than pure transaction fees. The banks and fintechs investing today in flexible infrastructure are positioning for a market where the core payment rail is increasingly instant, account-linked, and card-scheme-independent.