CEPAS

Impact on Consumers, Card Issuers, and Society

In 2009, Singapore had two major card issuers with non-interoperable cards. Using cards for payments was becoming more desirable as cash handling began to become more expense and less efficient. The cost of handing e-payments was about a third or half that of handing a cash transaction and also a study by Visa showed for every 10% increase in the share of e-payments in the economy could stimulate GDP growth by as much as 0.5%. Also by having an interoperable system, consumers would have higher security and more choices of service providers.

For card issuers, the ability to have an interoperable card would ensure a level playing field for the parties involved.

Society would feel an impact of becoming a cashless society, something that the Singapore government was keen to promote. Also, the Singapore Society would be able to benefit by having all the information all on one card so that the card users could use the train or car/park systems with one card. In have two non-interoperable cards it would cause a lot of inefficiencies causing problems for the users of the cards.  

Who are the main stakeholders and what are their motivations/incentives?

The stakeholders in the case are the card issuers and also society. The stakeholders motivations and interests were incentivizing investment in supporting infrastructure and complementary innovations as well as promoting the adoption and diffusion of the cards by consumers and merchants. The intent was to move away from proprietary systems towards an open environment such that one card would be used across all systems, and the resultant level playing field could lead to more micropayment participants and drive down costs.

What innovations were needed in order for the CEPAS standard to be useful?

The innovations that were needed were the creation of the contact-less card ecosystem and CEPAS-compliant payment mechanisms. These would provide a platform for the next step in e-payments. Merchants would need contact-less credit card or CEPAS terminals.

How well was their initial motivation addressed?

The initial motivations were addressed with wanting to bring together multiple payment application onto a single smart card, enable greater synergy between applications and minimize resources duplication.

Where were the key risks of the initiative and how was each mitigated?

The risks involved in the initiative were having merchants being able to have terminals that accepted this contact-less method of payment.  Also, consumers would need to find a place to trade in their card and be able to receive a universal card that would be accepted for retail and transportation needs. Also security was a major factor in merging the two divergent systems.