Popularity of Credit Cards | Rewards of Credit Cards in Singapore
Bank Accounts | Credit Cards
by Bienu
6 October 2020
Credit cards are very popular in Singapore. According to the MasterCard’s Mobile Payments Readiness Index, Singapore is ranked as the most “mobile payments ready” country in the world . The country has a very high penetration of credit cards. Indeed, credit cards are simple and easy to carry over carrying a wad of dollars while shopping or any other outing. Particularly when you are not sure, how much cash to carry, you can supplement it with the usage of a credit card. Or better still, if you to do some emergency purchase or need something at odd hours when you can’t rush to ATM, the credit card is a blessing.
Economical & Financial Benefits
Besides, there are certain economical and financial benefits also of using a credit card. Though there are still many vendors who don’t accept credit cards, most of the merchant outlets embed the cost of processing payments within their prices. This is known as ‘Interchange Fee.’ As soon as swipe your card at any outlet or service, your bank sends the money to merchant’s bank, hence all the companies in question this payment travels, collectively charge this interchange fee. Though merchants are liable for this fee to say restaurants, convenience stores, movie halls, airlines etc. the cost is being passed on consumers finally. The cost is being borne by you as a customer.
Though this fee is comparatively higher in Singapore. However, banks use their revenues from card processing fees to fund their credit card rewards programs. Typically, higher interchange fees translate to higher credit card rewards. So, as a credit card customer, you are not at a loss in Singapore.
Why is it beneficial to use credit cards in Singapore?
If we analyze, higher interchange fees translate to higher credit card rewards. Therefore, if you are not optimally using your credit card to maximize your rewards, you are losing out. You are anyway paying the high processing fees. This is typical of Singapore where both the cost – processing fee of not using cards and the benefit – credit card rewards are so high. Countries like Australia and the UK cap interchange fees at 0.2-0.5%, while it is around 2-3% in the US, whereas it is higher in Singapore. For instance, the best credit cards in Singapore can return 5% or more on the user’s spending, which is an extremely generous offer especially as compared to other nations.
The higher the fee, the higher the rewards and Singaporeans are loving it!
