According to Statista, global retail e-commerce sales in 2020 hit US$4.28 trillion, with Asia-Pacific becoming the largest market where sales account for 51% globally.
Of this, Singapore’s retail e-commerce market is valued at US$4 billion in 2020, compared to China’s retail e-commerce sales at US$2.3 trillion. But still, with over 80 percent internet penetration and a highly connected society, analysts believe that the city-state is a good base to test-bed marketing and sales strategies.
You should be where your customers are, and increasingly, that’s online. These customers, as they become comfortable with internet and mobile payment methods, are expecting and demanding 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, the most important consideration is to choose the best payment option from among the several few local/regional and international ones.
Below we discuss this in detail.
Form an E-Commerce Company in Singapore
This is just like incorporating any other private limited company in Singapore. But the benefits, if you have found a market for your product, are much much more.
- Firstly, the targeted customer base is many times of 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, utilities bills or employee salaries need to be paid.
E-commerce Payment Options for Online Businesses in Singapore
With the growth of e-commerce, the most common methods of accepting credit card payments is either by utilizing a payment gateway account only (also known as a third-party merchant) or by using your own merchant account (which also requires a payment gateway account to process payments).
Setting up a Merchant Account
An internet merchant account, which is a line of credit the bank extends to you, 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 as explained below.
DBS Merchant Payment Services
DBS Bank also has its own merchant payment service for e-commerce in Singapore, which is offered through reputable gateways to offer online payments, mail order telephone order (MOTO), and batch processing services. The benefits are the service provides real-time processing and validation of transactions, and all funds are set in Singapore dollars. The rates also vary depending on the business’s requirements.
Merchant Solutions
An initiative by Standard Chartered Bank and First Data to enable merchants in Singapore to accept online payments, which can be integrated on the merchant’s website without any extra 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 had set-up 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 authorize 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 in obtaining a merchant account if you don’t have one.
PayPal
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 is able to accept all major credit cards, debit cards, and bank transfers. 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.
Setting up a Payment Gateway Account (third-party merchants)
NETS
NETS is the most widely used e-payment option in Singapore with one in three 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.
Wirecard AG
Telemoney Electronic Payments offers this service in Singapore where merchants can accept credit cards and set up recurring payments with Wirecard AG. The service is popular for mobile commerce, bill payments, remittance, taxi payments, toll payments, etc. and accepts payment from most Asian payment gateways including Union Pay.
GTPay
Or 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.
Asia Pay
One of the largest online payment processors in Asia, Asia Pay offers a number of online payment solutions including mobile payments, evouchers, recurring payments, virtual terminals (MOTO), pre-payment, game payment, retail payment, and batch processing. Even though the set-up process of the payment gateway takes about two to three weeks,, this one-stop electronic payment service provider is very 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 Reading » Singapore vs. Vietnam Comparative Business Report
Our Take
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.
Incorporate an e-commerce company in Singapore quickly and easily
Singapore Company Incorporation is the leading force in company registration in Singapore. With a gamut of services including Work Visas & Relocation, Accounting & Taxation, Business Licenses, Company Secretary and Trademark Registration, we are well-positioned to support your business.
