Singapore Government Press Release

Media Division, Ministry of Information & The Arts, #36-00, PSA Building, 460 Alexandra Road, Singapore 119963, Tel: 3757794/5

ADDRESS BY DR RICHARD HU, MINISTER FOR FINANCE AT THE OFFICIAL LAUNCH OF CASHCARD 26 NOV 96, UOB PLAZA ATRIUM, 4.15 PM

Ladies & gentlemen,

It is my pleasure to officiate at the launch of the CashCard today. Today's launch of the CashCard represents 5 years of substantial effort and investment by the 6 local banking groups and POSBank. I congratulate the banks on their successful collaboration in developing the CashCard to make Singapore one of the first countries in the world to introduce an electronic pre-paid card scheme on a nationwide basis.

It has been the Government's policy to promote automation in Singapore in order to enhance the level of productivity in the economy and to alleviate problems caused by a tight labour market. In the financial sector, the aim is to develop Singapore into a cashless society to dispense with the need to handle cash and cheques. The CashCard is a step further towards achieving the vision under IT2000 of a truly cashless society.

In the past decade or so, banks in Singapore have been harnessing advancements in computer and information technology to increase the efficiency of their operations and to broaden the spectrum of services offered to their customers. The launch of the first Automated Teller Machines (ATMs) in 1980 brought about direct tangible benefits of automation to the man in the street as this effectively resulted in a provision of longer banking hours to service customers. Value was further added, when in 1988, the ATM networks of the local banks were linked to allow banking customers of one local bank to use the ATM of another bank to withdraw cash. Phone banking services were introduced in 1982, extending banking services to homes for the first time. This was followed by the introduction in 1990 of interactive home banking through the personal computer via the Teleview service of Singapore Telecoms.

The major milestones in the development of Singapore as a cashless society include:-

(a) The implementation of the interbank GIRO service in 1984. With the advent of interbank GIRO, gone are the days for most Singaporeans when pay days meant long queues at the bank to deposit their pay cheques or cash. The need to queue up to make payment for utilities and phone bills has also been eliminated. The Government has been actively encouraging Singaporeans to make use of the interbank GIRO service to make payment for all their Government services and charges.

(b) The NETS Electronic Funds Transfer at Point of Sale (EFTPOS) service was introduced in 1986 to facilitate cashless retail payments via ATM cards. With wider consumer acceptance, the volume of EFTPOS transactions has increased significantly to more than 110,000 transactions with an aggregate value of S$7m daily.

(c) In 1993, banks enhanced their ATM networks to provide facilities for Electronic Share Applications. The Electronic Share Application service has eliminated the need for investors to queue up to obtain their share application forms and to purchase cashier's orders to subscribe for shares. With the Electronic Share Application service, the funds of unsuccessful applicants are also electronically credited back into their bank accounts.

(d) Earlier this year, the Stock Exchange of Singapore launched its Dividend Crediting Service to allow shareholders to receive dividends directly in their bank accounts. With this service, listed companies no longer have to send out dividend cheques to their shareholders. Shareholders also benefit from not having to deposit such cheques into their bank accounts and to wait for the cheques to clear. The service has been well-received, and almost 60% of all CDP account holders have signed up for the service.

(e) NETS has also recently introduced a pilot trial for its multi-media payment kiosk network. The kiosk allows ATM cardholders to make payments electronically for parking and traffic offences, as well as purchases of tickets to various tourist attractions in Singapore. A successful trial could lead to a wider range of services being offered through the kiosk network.

The realisation of the cashless Singapore society has come a long way and the Singapore economy has benefited from the efficiencies resulting from a reduction in cash handling.

The CashCard provides an alternative means for small value payments in an electronic manner. Smart card technology has made secure off-line verifications of the card's authenticity possible, resulting in the economic viability of the CashCard as a means of payment for small value transactions such as purchases through vending machines and for photocopying services. It goes without saying that there would be a need to constantly re-assess security schemes in the light of the latest computing technology, and the state of advancement in cryptanalysis. Any failure in the security framework to prevent or detect counterfeiting would inevitably lead to a loss of confidence in the system.

The issue of regulation of electronic money has been pre-occupying the minds of major central banks. As electronic money schemes require pre-payment, they are no different from deposit-taking. Hence, such schemes should only be provided by licensed and properly supervised deposit-taking institutions. The Banking Act was amended in 1993 to restrict the issuance of multi-purpose stored value cards only to banks in Singapore with MAS approval. The Act also requires issuing banks to hold reserves against the proceeds derived from the issue of such cards to protect the interest of the public. The European Monetary Institute had in 1994 similarly decided that the issue of multi-purpose pre-paid cards in Europe should be restricted only to credit institutions.

I am also pleased to announce today the launch of a new platform for the Monetary Authority of Singapore Network Service or MASNET. MASNET was introduced by MAS in 1991 to facilitate the transmission of returns and other reports from financial institutions to MAS in an efficient and low cost manner in order to eliminate the need for the physical delivery and handling of such reports. Over the years, MASNET has been transformed into a communication hub and versatile information source for the financial sector as value-added applications were added. Presently, 741 organisations including financial institutions, insurance companies, publicly-listed companies, news wire services and Government agencies subscribe to MASNET.

With the new platform, subscribers can look forward to more user-friendly features such as a Windows-based environment with a more powerful search engine and enhanced security protection. The new platform is also able to integrate graphics, scanned images, voice and video messages in documents and to allow subscribers to view the documents without the need for users to install the necessary software in their own computers.

The information services on MASNET will also be enlarged to include news and financial reports, as well as stock and futures prices, and the various MAS publications such as the Directory of Financial Institutions, the MAS Annual Report and the Monthly Statistical Bulletin. With its more intuitive graphical interface and on-line help facility, we are confident of a smooth transition to the new platform for subscribers.

MAS' commitment to provide an efficient infrastructure to carry out electronic banking complements the Government's IT2000 plan to transform Singapore into an intelligent island by the next century.

Once again, it is my pleasure to congratulate the Development Bank of Singapore, Keppel Bank, Oversea-Chinese Banking Corporation, Overseas Union Bank, Post Office Savings Bank, United Overseas Bank, and Tat Lee Bank on the launch of the CashCard.

Thank you.