M-Money Mobilizes in Singapore
By David James, Wed Jan 24 00:00:00 GMT 2001

Singapore's government recently announced that it would make mobile money legal tender by the year 2008. All merchants and service providers would be legally required to accept payments exchanged electronically - via mobile phones, handheld computers and even wristwatches.


Why shouldn't a government promote m-money? With communications moving at the speed of light these days, people should be able to spend their money just as fast. No more carrying wads of paper money and handfuls of change, no more swiping credit or debit cards, and no more signing and losing little slips of paper. Just point and spend.

The Singapore government believes that their move to require merchants and others to accept m-money will help the economy by cutting the high cost of handling cash. Low Siang Kok, currency director at Singapore's Board of Commissioners of Currency, says that there are many benefits to be reaped from dispensing with traditional physical currency. "If you want to give it to your kids for pocket money, you pass it on to them by phone," Low said recently. "They can use it for bus fare, or the school cafeteria, or whatever." M-money is also safer to carry, he adds.

Coming Unwired


Singapore has been a leading information technology center for many years. It was the first country in Asia to adopt and aggressively pursue a national IT strategy focused on establishing a "knowledge-based" economy and regional IT hub. The government has introduced a succession of initiatives, starting in 1995 with its "Intelligent Island" program to provide nationwide broadband services. On the wireless side, its stated policy is to (1) help companies build and export wireless products and services globally, (2) build a world class wireless infrastructure, and (3) promote and enable a wireless lifestyle for Singaporeans. The government is working with wireless infrastructure developers, access service providers, and content creators and developers to implement wireless banking, stock trading, shopping and information services.

Singapore's IT efforts have clearly borne fruit. With a population of four million, Singapore now has a 99 percent broadband coverage connecting most of the country's homes, schools, government offices and businesses. There is an estimated Internet dialup penetration of 57.4 percent and an estimated mobile phone penetration of 71.5 percent. These are among the highest penetration rates in Asia, with only Hong Kong, at 73.5 percent, having a higher mobile penetration rate.

Playing Their Cards Right


And m-money is not new to most Singaporeans. This country is already so wirelessly mobile that for years Singaporean drivers entering the central business district have automatically paid an entry toll with a cashcard (a form of electronic wallet or smartcard commonly mounted on the dashboard) as their cars zip through a roadway portal. The holder of a cashcard loads the card with money by transferring electronic cash to it from a bank account. The cards are used not only for the roadway toll system but also for payments to a number of retail and public establishments. In addition, bank debit cards are in common usage. Singaporeans for years have used a debit card system called NETS that permits merchants to debit charges directly from a customer's bank account. Merchants love cashcards and debit cards because there is no risk of bounced payments or bad credit, and account reconciliation is handled automatically. Customers also like the convenience of these cards - except when they lose or misplace them.

Apart from the credit and convenience advantages of m-money, there can be substantial savings to businesses in the collection and accounting of funds. M-money often eliminates the need for workers who simply handle payment transactions, notes Arnold Khoo, managing director of Ark Infotech Pte. Ltd., a banking software development firm in Singapore. "Some parking lots, for example, are now fully automated, requiring a cashcard for entry, payment and exit, eliminating the need for an attendant," he says. "In Singapore, where low skilled labor is scarce, I expect to see strong growth in m-money applications and usage."

M-Teching M-Money


The next step for m-money in Singapore is to put cashcard communication systems into mobile phones and other handheld devices. The government and the banks will establish security and transaction protocols, and various electronic payment firms, such as Hypercom, Verifone and Schlumberger, will provide hardware solutions for merchants and service providers. Khoo believes that there will be multiple communication technologies for m-money applications, including those of Bluetooth, 802.11 and SMS (short message service), and that they will be open, i.e., non-exclusive, technologies. Currently, electronic payment firms supply communication technologies for cashcards in Singapore, but Khoo thinks that the tech leadership for this will now shift to mobile phone manufacturers like Nokia, Siemens and Ericsson.

The technology for electronic money itself is well advanced, but it involves three unique challenges. One challenge is to encrypt the data that constitutes the e-money in a way that prevents its use by anyone other than its owner. Another challenge is to permit e-money that can be either "identified" or "anonymous." Identified e-money can be traced through the banking systems, from the original owner to the final recipient, much like a check or a credit card payment. Anonymous e-money is more like physical cash in that it can be spent or given away without leaving a transaction trail. But the most complex challenge involves preventing the "double-spending" of anonymous e-money: a recipient of e-money must not be permitted to "copy" it and spend it more than once. Fortunately, there are technologies that prevent double spending by attaching to anonymous e-money an indication that it has already been spent or by attaching to identified e-money the entire chain of transactions as it is passed through the system until it is ultimately deposited.

Big Brother Meets Midas


The non-technical issue for m-money is the Big Brother issue - whether the public will be comfortable with the knowledge that the government can trace every payment a person makes. In many Western countries, people would raise concerns over rights of privacy, as they have in the United States over the possible use by the FBI of the so-called Clipper chip in a proposed telecommunications surveillance system. But Singaporeans are accustomed to an invasive government. Says Khoo: "As long as our government is clean and is trusted by the people, as it is now, the tracing of m-money transactions is not a problem. Perhaps we should be more concerned with the government's involvement in our lives, but in a paradoxical way it is our trust in our government that has advanced the country well beyond the limitations of its size and population."

And perhaps the final issue for m-money is the Midas issue. Will people - even IT-happy Singaporeans - be willing to forgo the pleasure of whipping out a really fat wad of paper money and peeling off several large-denomination bills to pay for a routine purchase? Pleasures like that are not to be denied.

David James is president of Business Strategies International, a San Francisco-based consulting and venture-development firm specializing in Asia-Pacific business opportunities.

Please note that W3C has no plans to, "integrate three different content description languages: C-HTML (compact Hyper Text Markup Language), MML (Mobile Markup Language) and WML (Wireless Markup Language)" as was erroneously reported in the article "Markup Languages for Cell Phones to be Standardized" which appeared on TheFeature on January 19. We apologize for any inconvenience that this may have caused W3C or to our readers.