New research from the global small business platform Xero shows that younger consumers in Singapore are at the forefront of the move toward digital payments. However, more than half of small businesses in the country still do not offer cash payment options.

Xero’s latest report, titled *I Want to Pay That Way*, explored the changing payment habits of consumers and how small businesses are adjusting to these changes.

Digital Payment Technology Rapidly Expanding in Singapore

The survey results indicate a significant rise in digital payment usage in Singapore, supported by strong government efforts to create a digitally connected society.

Currently, over three-quarters of Singaporean consumers (76%) use credit or debit cards for payments. More than half of the population uses the PayNow service (55%) or bank transfers (55%). Additionally, about a fifth of consumers are using the GrabPay e-wallet service (22%) and buy now, pay later platforms (21%). The research also showed that 30% of Singaporean consumers only carry their mobile phones for payments when shopping, which is higher than the global average of 21%.

Younger generations are leading the adoption of digital payments, with 68% of Gen Z consumers in Singapore preferring PayNow, and about a third (29%) also using GrabPay.

“Singapore is leading the way in building a strong digital payment system, which aligns with its broader goals of a digital economy and Smart Nation initiatives. While supportive regulations and related initiatives are helping small businesses and consumers adopt digital payments, targeted support will be essential for small businesses to offer more payment options,” said Koren Wines, Managing Director, Asia, Xero.

Disconnect Between Customer Payment Preferences and Available Options

The findings also show that not meeting consumer payment preferences can negatively affect customer loyalty and revenue. About 18% of Singaporean consumers said they would choose another business that offers more payment options if a business didn’t provide one of their preferred methods.

Despite the shift toward a cashless society, cash remains a popular payment method for a large part of Singapore’s population. Nearly eight in ten (79%) Singaporean consumers use cash for transactions, showing its continued relevance in daily life.

However, half (51%) of local small businesses no longer offer cash as a payment option, making Singapore the least likely among surveyed countries to accept cash payments, even though it has the highest percentage of consumers who still prefer this method.

Benefits of New Payment Methods Increase Small Business Confidence

Nearly nine in ten (87%) small businesses in Singapore reported benefits from adopting new payment methods in the last 6 to 12 months. Key benefits include reduced payment processing time (43%), retaining more business (42%), and increased sales (41%).

Many small businesses in Singapore are optimistic about future payment methods. These include biometric authentication like fingerprint or facial scanning (36%), bartering marketplaces/apps (33%), and augmented reality (33%). About a third (31%) of small businesses expressed interest in implantable payment chips, a much higher number than those in Australia (7%) and New Zealand (9%) included in the research.

Xero is committed to developing payment solutions that make it easier for small businesses to manage and collect payments smoothly, while also maintaining healthy cash flow.

Bharathi Ramavarjula, SVP of Payments at Xero, said: “Understanding how different consumers prefer to pay and giving them the flexibility to choose their payment method will help small businesses get paid faster and grow their revenue. To support this, Xero is offering small businesses more ways to get paid.”