In this article
- E-commerce Payment Options for Online Businesses in Singapore
- Setting up a Merchant Account
- Setting up a Payment Gateway Account (third-party merchants)
- Buy Now, Pay Later (BNPL)
- Our Take
- Form an E-commerce Company in Singapore
It’s no secret that e-commerce is growing at breakneck speed worldwide, especially with the pandemic driving people online over the past couple of years.
Global e-commerce sales are forecast to reach US$5.5 trillion globally in 2022. It is expected to exceed US$7.3 trillion, taking up a share of 23.6% of total global retail sales, up from 20.3% this year.
According to Euromonitor, e-commerce sales in the Asia-Pacific alone are expected to almost double to hit US$2 trillion. Southeast Asia’s e-commerce sales are projected to expand by 18% to reach US$38.2 billion.
Of this, Singapore’s retail e-commerce market is seen to grow to US$9 billion in 2022 and US$14 billion by 2027.
With 92% internet penetration and a highly connected society, analysts believe that the city-state is an excellent base to test-bed marketing and sales strategies.
You should be where your customers are, and increasingly, that’s online. As they become comfortable with internet and mobile payment methods, these customers expect and demand a seamless e-commerce transaction experience.
This will eventually affect your online sales.
Thus, if you are interested in starting an e-commerce business in Singapore, a key consideration is choosing the best payment method from several local, regional, and international ones.
We discuss this further below!
E-commerce Payment Options for Online Businesses in Singapore
With the growth of e-commerce, the most common method of accepting credit card payments is either using a payment gateway account (also known as a third-party merchant) or your own merchant account (which also requires a payment gateway account to process payments).
Setting up a Merchant Account
An internet merchant account is a line of credit the bank extends to you. It gives an e-commerce company the ability to process credit card payments.
While you can use your own bank to set up a merchant account, it’s always advisable to browse through other banks for better rates.
For instance, the merchant account provided by DBS and Standard Chartered banks is explained below.
DBS Merchant Payment Services
DBS Bank also has its own merchant payment service for e-commerce in Singapore. The service is offered through reputable gateways to offer:
- Online payments
- Mail order telephone orders (MOTO)
- Batch processing services
The benefits include real-time processing and validation of transactions, and all funds set in Singapore dollars. The rates also vary depending on the business’s requirements.
Related Read: How to make your Online Business friendly »
An initiative by Standard Chartered Bank and First Data to enable merchants in Singapore to accept online payments, Merchant Solutions can be integrated into the merchant’s website without any additional software installation.
Merchants also have the option of customising their payment pages and are offered Visa and Mastercard secure seals at no additional costs.
After you have set up your merchant account, you will need an online credit card transaction handler known as a payment gateway account.
This gateway handles verification and transfer requests and interacts with the card issuer’s bank to authorise the credit card in real-time when a purchase is made on a website.
One example of such a payment gateway is PayPal, which can also help you obtain a merchant account if you don’t have one.
A global leader in online payment solutions, PayPal offers two solutions for merchants:
Website Payments Standard
It’s an easy way to start accepting credit cards securely online with a simple integration of PayPal-provided code in your website.
After setting up the system on its website, the merchant can accept all major credit cards, debit cards, and bank transfers.
More importantly, the transaction fees are low, and you don’t need a separate merchant account or gateway.
Website Payments Pro
An all-in-one solution where customers paying by credit card stay on your website for the entire transaction, with PayPal remaining invisible. The Payment Pro option has features comparable to merchant accounts and gateways at a lower cost.
Related Read: Using Technology to Stay Competitive »
Setting up a Payment Gateway Account (Third-Party Merchants)
NETS is the most widely used e-payment option in Singapore, with 1 in 3 people using NETS every day.
It is owned by Singapore’s largest banks – DBS Bank, OCBC Bank, and United Overseas Bank (UOB) and is designated as a national payment system by the Monetary Authority of Singapore.
With regards to e-commerce, NETS provides two main types of services:
- eNETS: A payment gateway that accepts credit/debit card payments and direct debit
- Merchant Collection Services: A payment gateway via internet banking and NETS kiosks
BrainTree is owned by PayPal and is an integrated payment gateway. Compared to its owner, it is a relatively more modern choice for handling split payments you share with them for using the app.
You can customise your checkout page easily using this payment solution and give your customers a better user experience.
Southeast Asia’s homegrown decacorn, Grab, also offers GrabPay, its payment gateway, to merchants. It’s a good choice for new business owners, allowing full payment receipt immediately, complete encryption, and the ability to check transaction details easily.
PayPal Express Checkout
PayPal also provides a hosted payment gateway, PayPal Express Checkout, that is suitable for merchants with an existing PayPal business account.
There are no setup nor monthly fees, and you can apply for discounted rates if you reach the minimum qualifying monthly sales volume.
PayLah! is a payment gateway owned and operated by DBS Bank. It is a highly popular option that directly debits money from customers’ DBS accounts.
However, it may not be ideal for new startup merchants with the pricey one-time setup fee of S$800, annual usage fee of S$1,000, and 3% fee on card transactions.
Global Trading Pay is a Singapore-based e-commerce payment solution provider that accepts major credit cards like MasterCard, Visa, AMEX, and JCB as well as payments from AliPay and Union Pay.
As GTPay is a payment processor, merchants do not need a merchant bank account to receive payments.
Stripe was launched in 2016 as an integrated payment gateway in Singapore. Merchants need not pay setup nor monthly fees to use Stripe, and it also offers discounts for businesses with large monthly payment volumes.
One of the largest online payment processors in Asia, AsiaPay offers a number of online payment solutions including:
- Mobile payments
- Recurring payments
- Virtual terminals (MOTO)
- Game payment
- Retail payment
- Batch processing
Even though the setup process of the payment gateway takes about 2 to 3 weeks, this comprehensive electronic payment service provider is popular among businesses in Singapore, Thailand, China, India, Vietnam, Philippines, Taiwan, and Hong Kong.
To summarise, the advantages and disadvantages of both merchant and third-party accounts (aka gateway accounts):
|Merchant Account||Third-party Account|
|Advantages||transaction ease||no need for approval|
|protection against fraud||disputes are handled together (merchant and third-party)|
|merchant maintains control||most are well-known (such as PayPal)|
|payments are received faster|
|merchant’s name is on the transaction statement|
|Disadvantages||cost is more||fees are higher|
|self-handling of disputes||third-party’s name is on the transaction statement|
|sometimes there are hidden fees||choose judicially as some third-party merchants have attain bad reputation in the market|
Related Read: How to Build a Successful Ecommerce Site in 12 Steps »
Buy Now, Pay Later (BNPL)
This payment mode has been gaining immense popularity as an alternative method for consumers. It typically allows them to split their payments into 3 interest-free installments.
Atome is one of the pioneer BNPL payment providers in Singapore. Merchants are not charged a setup fee, but rather a Merchant Discount Rate (MDR). It can also be integrated into a variety of different payment gateways and platforms.
Like Atome, hoolah is a BNPL online payment gateway that enables customers to pay in 3 monthly installments. It sends the full payment amount to merchants in 4 days and is a good choice for new merchants.
So Which Option Should You Choose?
If you are a Singapore-based firm or a brick-and-motor store going online, setting up a local Merchant Account along with a Payment Gateway Account is the way to go.
You get an online e-commerce presence as well as can catch hold of the service provider if things go awry.
But if you are a foreign company looking to do e-commerce in Singapore, opening a local Merchant Account may be troublesome.
The easiest option, in this case, is to incorporate an offshore company (also called an International Business Corporation) in the Marshall Islands and use a third-party payment gateway such as PayPal to carry out your e-commerce transactions in Singapore.
Form an E-Commerce Company in Singapore
Starting an e-commerce business is similar to incorporating any other private limited company in Singapore. However, there are plenty more benefits.
- Firstly, the targeted customer base is many times what you can access through a brick-and-mortar location. Basically, the entire world is your target
- Since an e-commerce business always remains open, you get the benefit of around-the-clock sales
- Lastly, and most importantly, running an online business reduces costs as no rent, utility bills or employee salaries need to be paid
Let Singapore Company Incorporation take care of your e-commerce business setup process for you! We have skilled professionals on our incorporation team that can ensure a seamless and hassle-free experience.
Incorporate an e-commerce company in Singapore quickly and easily
Set up your e-commerce business in Singapore and integrate your merchant payment provider today!