The Real Impact of FinTech: Evidence from Mobile Payment Technology in Singapore
In recent years, financial technology (FinTech) has revolutionized the way consumers and businesses engage with financial services. Among the transformative innovations, mobile payment technology stands out due to its rapid adoption and widespread use worldwide. A study led by Sumit Agarwal, Wenlan Qian, Yuan Ren, Hsin-Tien Tiffany Tsai, and Bernard Yeung, published on VoxEU in November 2025, offers an in-depth examination of Singapore’s mobile payment rollout and its economic impacts across consumers, businesses, and banks.
Singapore as a Model for Mobile Payment Adoption
Despite Singapore’s high smartphone penetration (73%) and nearly universal banking coverage (98%) in 2016, mobile payments were scarcely used by retailers, comprising just 3% of acceptance at the point of sale. Cash still dominated transactions, making up 60% of payments. In 2017, the Singapore government, alongside financial institutions, launched a concerted push to digitize payments, aiming to enhance efficiency and foster financial innovation.
The pivotal moment was the April 2017 introduction of QR code-based mobile payments by DBS Bank, the nation’s largest bank. This allowed instant, secure, and low-cost transactions, quickly adopted by other banks in Singapore. The subsequent rollout of PayNow, starting in July 2017, enabled fee-free interbank transfers using mobile numbers or national IDs, further simplifying mobile transactions for consumers and businesses alike.
Rapid Uptake and Economic Ripples
Data from Singapore’s Accounting and Corporate Regulatory Authority and transaction-level statistics from 138,448 DBS customers reveal a remarkable shift in consumer behavior. In just one year, mobile payment usage surged from 8.6% to 33.4%, while user sign-ups increased from 31.9% to nearly half of the consumers at 47.9%. The total transaction value through mobile payments grew tenfold.
Boost to Small Businesses and Entrepreneurship
The research highlights a significant stimulus to small business formation, particularly among traditionally cash-dependent merchants. By lowering transaction costs and improving payment speed, record-keeping, and reducing risks associated with handling cash, mobile payments created fertile ground for new enterprises.
By comparing industries heavily reliant on consumer-to-business (C2B) payments with business-to-business (B2B) sectors, the study found that after mobile payments were introduced, C2B business entries increased by over 18% compared to B2B. Over 15 months, this resulted in a cumulative rise of 268% in new businesses within C2B sectors. Small businesses showed the most pronounced growth, particularly in low-income neighborhoods and cash-intensive industries.
Self-employed individuals using DBS saw tangible benefits: a 6.9% increase in cash inflows, a 2.9% increase in outflows, a reduction in liquidity holdings by 2.9%, and a 3% rise in spending. These indicators point to improved income and operational efficiency facilitated by mobile payment technology.
Consumer Spending and Behavioral Changes
The introduction of mobile payments also markedly influenced consumer spending habits. By evaluating PayLah! digital wallet adopters, researchers observed a monthly increase in spending of SGD 3.1, a notable decline in ATM withdrawals, and overall spending growth of approximately 4.1%, equating to SGD 172 more per person each month. This produced an estimated SGD 100 million in additional annual spending within the sample, though it represented only a fraction (5%) of DBS’s total consumer base.
Importantly, the surge was most significant among consumers who previously depended heavily on cash, suggesting mobile payments alleviated liquidity constraints and enhanced purchasing power from small merchants. Concurrently, credit card usage also increased, likely spurred by banks expanding credit card offerings. Despite increased spending, signs of impulsive or debt-fueled consumption were absent, as delinquency rates remained stable.
Impact on Banking Practices
Mobile payments not only reshaped consumer and merchant behavior but also prompted strategic adaptations by traditional banks. Institutions responded to reduced demand for cash withdrawals by scaling down ATM infrastructure in areas traditionally dependent on cash. Simultaneously, banks expanded their credit services, facilitating greater consumer access to credit in a digitized financial environment.
Conclusion
The Singapore case study evidences the profound economic and structural impacts of mobile payment technology as part of the broader FinTech revolution. By enabling more efficient digital transactions, mobile payments have stimulated small business growth, increased consumer spending—especially among previously underserved groups—and prompted financial institutions to evolve their service models. This highlights mobile payments’ potential as a low-cost digital innovation that can contribute significantly to economic dynamism and inclusion.
Authors: Sumit Agarwal, Wenlan Qian, Yuan Ren, Hsin-Tien Tiffany Tsai, Bernard Yeung
Published on: 29 November 2025
Source: Centre for Economic Policy Research (CEPR) via VoxEU
For more insights on the evolving landscape of FinTech and its economic consequences, visit VoxEU and the CEPR research series.
