Time to shake up Singapore’s bills payment landscape

Photo credit: inbj / 123RF Stock Photo.

It was a curious email from Citi Credit Cards that said: “Effective 12/12/2016, bills payments made via AXS e-stations, m-stations, SAM services (kiosk, web & mobile) will not earn Citi Dollars, Citi Miles, Cash Back, Citi Rebate, or SMRT$.”

It took me a while to understand what it all meant and to realize that Citi was going back to the dark ages. In such a highly competitive market of consumer credit cards, why was Citi pulling back on convenience and punishing its consumers? Does it not understand the severe implications of this?

What AXS and SAM are to Singaporeans

For the un-initiated to Singapore, AXS and SAM are convenient payment systems which many use to pay their bills at machines installed island-wide. (AXS has 900 machines while SAM has 300.)

To some consumers like myself, it is a way of saving on extra charges from budget airlines. By using AXS instead of the credit card online payment gateway, you can save up to US$11.21 on your flight ticket. To others who prefer not to pay their bills via their mobile phone or online, this is a great way to make a quick payment.

AXS and SAM have since evolved to include payments via online and mobile. They served one purpose: convenience.

The evolving landscape of paying credit card bills

My first very own credit card was a Citi Clear card back in 2002. It had many privileges especially for a new PMEB like myself. And while my needs evolved over the years, I was never without a Citi card — including one that had a photo, which can be considered as a photoID evidence when purchasing in the U.S. or Australia.

My bills came in paper form and I usually issued a cheque and mailed it back to Citi. That was fine if you had ample time to pay before the due date. However, if you forget about paying your bills and are just a day or two before due, you would have to rush down to a Citi branch to make a physical cash payment. (This was horrible because, in the past, there were only four physical branches.)

In recent years, AXS has started accepting payments for Citi credit card bills, which was convenient for me. So I move to e-paper statements and paid directly via AXS e-stations. To me, this way was more error-free, efficient, and environmentally friendly. (This also spared the poor credit processing person from reading my unintelligible writing.)

People use credit cards for benefits, not just payment

In my previous article about contactless payment systems, I talked about the eight million primary credit card holders in Singapore, each with an average of 5.4 credit cards.

It’s clear that people hold multiple credit cards. They use these to maximize the rewards they receive whether in the form of cash back, frequent flyer points, shopping vouchers, or products. Benefits are what drive consumers to use that particular plastic card for payment.

To add to this, they also like payment convenience, and for Singapore’s case, using the AXS and SAM machines are part of it.

So when Citi announced that in order to get benefits we needed to stop paying conveniently via AXS and SAM, you might understand why I wanted to chuck the Citi card out of my wallet. After all, I have many more credit cards who do not punish me for my love of convenience.

The cost issue that comes with convenience

I spoke with a banker friend who is familiar with the credit card industry. To be fair, he explained that AXS and SAM impose collection fees on merchants and banks for bill payments made through their respective systems. It has come to a point where the collection fee has eaten heavily into profits — merchants are earning almost zero to negative profits on their merchant processing fee.