What I learned building a mobile payments app in Singapore and facing DBS

Photo credit: Pixabay.

Everybody loves to hear a David and Goliath story. But this isn’t one. This is a story of how our startup, Spence, failed, the struggles we went through, and the lessons we learned.

The inception

In late August 2016, my friends and I were looking to participate in a hackathon. As interns enrolled in the NUS Overseas College Singapore (NOC) program, we were all fascinated by the many startups who went from participating in hackathons to building a unicorn. Some of us were looking for our big break.

Our team of five started brainstorming, sharing some problems we personally faced. I recalled my previous four-month stint in Shanghai where I experienced firsthand the convenience of mobile payments. So, I proposed working on a solution for Singapore, which we collectively agreed to. Back then, there weren’t many mobile-to-mobile payment solutions, and almost nothing catered to the needs of small business owners, which we identified as our niche.

For the next few days, I spent sleepless nights thinking about the user experience for our mobile app. It had to be really easy to use, requiring minimal intervention for merchants who are not tech-savvy. Our team worked tirelessly on the MVP and won the Most Creative Award at Hackfest SG on the demo day in September.

Hackfest SG 2016 Most Creative Award winners Edmond, Farhan, Yun Chuan, Qi Yong, and Bing Yang (clockwise from left).

After the hackathon, we went ahead with consumer and merchant validation as part of an entrepreneurship module in NOC. For nearly a month, we went around NUS interviewing 100+ consumers and 30+ canteen vendors, soliciting their feedback on our prototype.

The validation outcome turned out to be overwhelmingly positive, and I was encouraged to pursue this project further beyond academic scope. I applied for US$10,000 in funding from NUS and reached out to the Office of Campus Amenities (OCA) to request an audience for our proposed cashless project to be implemented in canteens. And these were granted to us.

Just as things were starting to gain some traction, I encountered some hurdles. The OCA was not convinced by our project because we quoted high transaction fees of around 3 to 4 percent to cover the projected credit/debit card processing costs. Meanwhile, I struggled to keep the team intact, as each of us had different aspirations and some were not as keen as I was to pursue our project as a startup.

Nonetheless, I was adamant in my belief that this project would benefit Singapore. I then applied for the US$50,000 ACE Startup Grant (now Startup SG Founder) administered by Spring Singapore. I also began recruiting a new team through LinkedIn and even by distributing flyers at events. By January 2017, I had a team of six, and the development on the Spence app officially began.

Between January and May 2017, some people in the team left due to school commitments but there were also new members. The core team worked tirelessly on the app development, sacrificing weekends and sleep for many months. Meanwhile, I refined our business strategy and decided to go with iBanking for Spence wallet top-ups, allowing us to significantly reduce transaction fees for merchants to less than 1 percent. The OCA was satisfied with our proposal and allowed us to launch a two-month trial.

The challenges we faced

Slow adoption

When we officially launched in May 2017, things did not turn out as we expected. Adoption was slow and many people were unaware of our existence despite the multiple posters we put up in The Deck. Even for those who were aware, some were not keen to download an app that can only be used in one canteen.

What we learned

Singapore’s payments landscape

Acknowledgements