PayNow is a digital payment service the Association of Banks in Singapore introduced in 2017 to simplify payments. The service allows customers to transfer funds instantly using their mobile numbers, National Registration Identity Card (NRIC) numbers, or Foreign Identification Numbers (FINs), eliminating the need to input the recipient’s bank account details. Once users link their mobile numbers, NRIC numbers, or FINs to their bank accounts, others can send money directly to their accounts using only that identifier.

PayNow is a unified approach to digital payments in Singapore, integrating with the banking systems of a wide range of banks. These banks include DBS/POSB, OCBC Bank, UOB, HSBC, Maybank, Standard Chartered, and Citibank. PayNow is accessible to most bank account holders in the country, and money is sent and received through banks’ internet banking sites or mobile banking apps.

The Monetary Authority of Singapore (MAS) supports this service as part of Singapore’s broader effort to advance towards a cashless society. PayNow operates around the clock, enabling immediate transfers at any time, and relies on the security measures of participating banks to protect transactions.

Below, we’ll discuss what businesses should know about PayNow as part of their payment strategies in Singapore.

What's in this article?

• How does PayNow work?
  
• How is PayNow used?
  
• Benefits of accepting PayNow
  
• PayNow’s costs and fees
  
• How to accept PayNow as a payment method
  
• How to set up PayNow with Stripe
  
• PayNow’s security measures
  
• Alternatives to PayNow
  
• How Stripe Payments can help
  

How does PayNow work?

PayNow is a real-time funds transfer service that lets users in Singapore send and receive money instantly. Here’s a step-by-step look at processing payments via PayNow:

• Register with your bank: To use PayNow, you first need to register with your bank. That involves linking your mobile number, NRIC number, or FIN to your bank account via your internet or mobile banking app. Once you’re registered, that number acts as an identifier for others to send money to your account.

• Initiate a transfer: To send money, you log in to your bank’s mobile or internet banking app and select PayNow as the transfer method. From there, you can input the recipient’s mobile number, NRIC number, or FIN or scan a quick-response (QR) code linked to the recipient’s bank account.

• Verify recipient and amount: For added security, you must confirm the amount and the recipient’s name before the transaction is processed.

• Confirm and process instantly: After you enter the amount and confirm the transaction, the money transfers instantly. Although PayNow is available at all hours, including public holidays, PayNow transactions are subject to limits set by a person’s bank. These can vary depending on the bank.

• The recipient receives the payment: The recipient gets the money in their linked bank account. The transfer is automatic and immediate and requires no action from the recipient, who will usually receive a notification from their bank that confirms the transaction.

Businesses use PayNow differently. They register using their Unique Entity Numbers (UENs). Customers can make payments to a business by entering its UEN or scanning the PayNow QR code provided by the business.

How is PayNow used?

PayNow is primarily used in Singapore, where it has become a popular method for digital transactions. In 2023, about 85% of individuals used it at least once and nearly 70% of businesses accepted it as a payment method. PayNow’s ease of use, speed, and integration with major banks have made it a versatile tool for a wide range of personal, business, and government transactions. Here are the most common scenarios in which PayNow is used:

Benefits of accepting PayNow

Businesses that accept PayNow might see these benefits for their operations and financial management practices:

• Instant payments and improved cash flow: PayNow simplifies the payment process with QR codes and UENs. This can enhance the customer experience, potentially increasing sales and customer satisfaction. Additionally, since businesses receive payments instantly, using PayNow can improve cash flow and agility in financial planning.

• Lower transaction costs compared to cards: Transaction fees for PayNow are typically lower than credit card processing fees, although they vary depending on the bank and type of business account. Some banks offer PayNow services with no transaction fee or a nominal charge per transaction. PayNow also decreases the need to handle cash or process cheques, which can lower costs associated with these activities.

• Lower fraud risk and stronger security: PayNow transactions use the strong security systems of online banking and are less risky than cash or cheque payments, which are more susceptible to theft, loss, and fraud.

• Easier payment reconciliation and accounting: For businesses, reconciling payments can be time-consuming and prone to error. PayNow simplifies this process by instantly recording each transaction for easier tracking through bank systems, simplifying financial management.

• Access to a broader Singapore customer base: Because PayNow is available to anyone with a bank account in Singapore, it lets companies access a broader customer base. This can be especially beneficial for small businesses that are trying to expand their market reach.

• Faster B2B payments and supplier settlements: PayNow can facilitate smoother B2B transactions by allowing businesses to pay suppliers or service providers instantly, strengthening supply chain relationships and potentially generating more favourable terms.

• Automation and digital finance workflows: With PayNow, businesses can automate certain aspects of their financial operations, such as recurring payments.

PayNow’s costs and fees

PayNow’s fee structures reflect the service’s goal of providing an affordable, effective digital payment solution for businesses in Singapore. The fee structure varies by bank. For the most current and detailed fee information, check with the chosen bank. Most banks don’t charge additional fees to accept PayNow payments, but some charge businesses a nominal fee for registering a Singapore Quick Response Code (SGQR), which is a one-time cost.

How to accept PayNow as a payment method

Businesses in Singapore that are interested in accepting PayNow payments must complete these steps and meet the requirements:

1. Register as a business in Singapore: To accept PayNow, the company must be registered in Singapore with a valid UEN. This applies to Singapore-based businesses and foreign businesses in the country. The latter must be incorporated in Singapore with a valid UEN to register for and accept PayNow payments.

2. Verify your business bank account: Businesses must have a business bank account with one of the banks in the PayNow environment. Foreign companies must have an SGD-denominated business account to use PayNow.

3. Register for PayNow: Businesses must register for PayNow Corporate with a participating bank or nonbank financial institution. This is typically done through the bank’s online business banking portal or business mobile banking app.

4. Link your account number to PayNow: During registration, the company will link its UEN to its bank account. This UEN will be used as the identifier for customers to make payments. Businesses can also choose to generate a PayNow QR code, which they can display at the point of sale (POS) or include on invoices. Customers can pay by scanning this QR code with their banks’ mobile apps.

5. Accept and comply with the terms and conditions: Businesses must comply with the terms and conditions set by their banks for using PayNow Corporate, which might include transaction limits or fees.

6. Implement required security protocols: Businesses that accept PayNow must follow relevant security protocols to protect their transactions and customer data, in line with the Personal Data Protection Act in Singapore.

How to set up PayNow with Stripe

Using any payment service entails compliance with all terms of service and internal policies. With Stripe, this includes complying with Know Your Customer (KYC) requirements and Anti-Money Laundering (AML) regulations, which can involve providing business details, ownership structure, and bank account information. Although each service will have its own setup, here’s an example of how to set up PayNow via Stripe:

• Register for an account: Businesses must register for a Stripe account and confirm that Stripe supports their countries.

• Integrate the Stripe system: Companies must integrate Stripe’s payment processing system into their website or ecommerce platform. Stripe provides application programming interfaces (APIs) and other tools for this integration.

• Set up payment methods: Businesses can configure their accepted payment methods within the Stripe Dashboard. Including PayNow will allow customers in Singapore to choose PayNow at checkout, where they’ll be presented with a QR code generated by Stripe that they can scan with their bank apps. Alternatively, they can use the provided UEN to make the payment.

• Process transactions: Once the customer completes the payment via their bank’s PayNow interface, Stripe processes the transaction and credits the funds to the business’s Stripe account. Stripe will then settle the funds into the business’s designated bank account, which doesn’t need to be in Singapore. Businesses that use Stripe to accept PayNow payments in Singapore will incur a processing fee of 1.3% of the transaction value.

• Convert currency: Stripe can convert payments to a business’s local currency, which will incur conversion fees. Companies should pay careful attention to the currency in which they’re receiving payments and the relevant conversion fees.

PayNow’s security measures

PayNow incorporates several security measures to protect the safety of its transactions for people and businesses. These measures, outlined below, protect against unauthorised access and fraud.

Bank security protocols

PayNow uses the security frameworks of participating banks by processing all transactions via online banking portals. These security protocols are comprehensive, involving encryption and secure channels to protect data during transmission. PayNow relies on these protocols during the account registration process and while facilitating transactions. When a person first links their mobile number, NRIC number, or FIN to their bank account to use PayNow, the bank platform secures the process.

Two-factor authentication (2FA)

Requiring 2FA is a standard practice in banking operations. When someone performs a transaction using PayNow, they often need to authenticate the transaction using 2FA. This could involve a one-time password sent to their mobile phone or generated through a hardware token, or biometric authentication such as a fingerprint or facial recognition.

Payment verification

Before the transaction completes, PayNow shows the name registered with the recipient’s listed mobile number, NRIC number, or FIN. This feature allows the sender to verify they’re sending money to the right person.

Transaction monitoring

Banks continuously monitor PayNow transactions for unusual or suspicious activity.

Regulatory compliance

The banks that participate in PayNow adhere to stringent regulatory requirements set by financial authorities such as the MAS. These requirements include regular security assessments and updates to ensure the system remains safe against emerging threats.

Transaction limits

Banks each assign specific limits to PayNow transaction amounts. These limits protect against large fraudulent transactions. At OCBC Bank, for example, daily PayNow transaction limits are set at 1,000 SGD. At UOB Bank, users can make PayNow transfers up to a cumulative daily limit of 200,000 SGD. At DBS Bank, the cumulative daily transaction limit for PayNow is 1,000 SGD; larger transactions must be signed with an iBanking token for additional authentication.

Customer communication

Banks often provide educational materials and alerts to customers about how to secure their accounts and stay vigilant against scams.

Alternatives to PayNow

Businesses that operate in Singapore have several alternative options to PayNow, each with its own set of features and primary use cases. These alternatives include the following:

• Network for Electronic Transfers (NETS): NETS is a widely used payment method in Singapore that enables immediate electronic transfers. NETS is more commonly used for POS transactions that use NETS cards, while PayNow is used for mobile and online transfers that use mobile numbers or NRIC numbers.

• Fast and Secure Transfers (FAST): FAST provides immediate interbank transfers in Singapore. Although PayNow can use mobile numbers or NRIC numbers for transfers, FAST requires bank account details.

• SGQR: SGQR is a payment system that creates a unified payment QR code. Using this code, customers can pay with multiple methods, including PayNow.

• Credit and debit card payments: Credit and debit card payments are another electronic payment method widely accepted in Singapore. Card payments often involve higher fees for businesses and require physical or virtual card details rather than the simpler proxy identifiers (e.g., mobile numbers) used in PayNow.

• Digital wallets: Digital wallets like GrabPay and Singtel Dash are another contactless, mobile payment option. Unlike PayNow, which integrates with multiple banks and doesn’t require an app, these digital wallets are closed systems and require both parties to have the app to complete transactions.

• Bank transfers: Online bank transfers are another way to move funds directly between bank accounts like PayNow does. These transfers might be slower than PayNow’s instant payout process and require the recipient’s bank account details to complete.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business – from scaling startups to global enterprises – accept payments online, in person and around the world.

Stripe Payments can help you:

• Optimise your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods and Link, a wallet built by Stripe.

• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.

• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalise interactions, reward loyalty and grow revenue.

• Improve payment performance: Increase revenue with a range of customisable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorisation rates.

• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.

Learn more about how Stripe Payments can power your online and in-person payments or get started today.