SimplyGo EZ-Link woes: Why contactless payment lifted off elsewhere but not in Singapore

Amid the uproar over the switch to a new SimplyGo EZ-Link transit card in Singapore this past week, it is easy to forget what has been ailing the country’s contactless payments market and overlook the missed opportunities in the past two decades.

The authorities have always selected technologies that may seem far-sighted but their implementation has often left users feeling confused, inconvenienced and let down.

Why can’t Singapore’s contactless cards be as convenient and efficient as, say, Japan’s IC (integrated circuit) cards, like the Suica or Pasmo?

You know, those handy contactless cards that you tap at a Tokyo subway gantry and also use to pay for a bowl of ramen after getting out of the station?

Thing is, Singapore’s old ez-link contactless cards had used the same Sony FeliCa technology, which included a secure chip embedded in the cards, from 2002 to 2009.

Initially made for transit, this technology is fast. For millions of people commuting every day, a train station gantry is expected to open in milliseconds after they tap a card on it.

So, why hasn’t Singapore’s ez-link card been as widely used here as its counterparts in Japan and also Hong Kong, where the Octopus card uses the same Sony technology? Fragmentation is the answer.

Back then, the company Nets, which is owned by major banks in Singapore, already had a stored-value card that was used mainly by drivers to pay road toll.

Unsurprisingly, they also wanted to get into the contactless card game. The prize was similar to both backers of ez-link and the Nets CashCard – a cut of the spending you’d make on these stored-value cards.

The problem was these two cards were not interchangeable. So, some shops near train stations might accept an ez-link card but other retailers might only take your CashCard. Who wants so many cards?

So, in a bid to harmonise everything, the Singapore government in the 2000s decided to come up with a local standard called Cepas. Dumping the FeliCa chip in 2009, it aimed to make future contactless cards from both Nets and EZ-Link compatible.

In other words, you could use your ez-link card to pay for ERP (electronic road pricing) charges and also a CashCard to take a train. Despite small issues – like some carparks not accepting the new cards – Cepas worked.

Unfortunately, if you thought this would solve the biggest problem – fragmentation – it sadly didn’t. Since both Nets and EZ-Link had wasted the years of head start they had in the market, many other players muscled in.

You soon had credit card companies offering contactless payment at cafes, supermarkets and other retail joints, essentially negating the need for a CashCard or ez-link card. In no time, Singaporeans got used to waving a credit card at readers.

At the same time, mobile phones became more secure and able to safely keep sensitive data like your card information onboard.

These gadgets would become e-wallets, through apps like Apple Pay or Google Pay/Wallet. Why bother with a contactless card unless you need it to pay for road toll or train rides?

And that is where we are today. Essentially, the SimplyGo EZ-Link system works in a similar way to your credit card or e-wallet apps.

It uses a standard created by EMVCo, a consortium of credit card companies including Visa, Mastercard, American Express and others.

There is an important difference from past contactless cards. With this technology, your new SimplyGo EZ-Link card doesn’t hold a stored value on its chip but instead just your account information that is checked when you tap it on a gantry.

The gantry then reconciles with a server online to confirm that your card is valid and also other information like where you have entered from and will eventually exit (thus calculating the fare).

Unfortunately, this means it can’t instantaneously show the stored value on your card since the card no longer holds a stored value onboard.

That information, like your bank or credit card account, is online. To fetch it and display it on a gantry takes a few seconds – too much of a wait at peak hour.

On the flip side, the new system adds flexibility – you can remotely top up the card with an app, even cancel it if you misplace the physical card.

Plus, this opens up a lot more payment options. Already now, you can use your credit card or phone wallet (tied to a credit card) to pay for your trips. No more paying a deposit for a stored-value card that expires every few years.

However, as many have pointed out, the new system has a critical issue – it doesn’t show you on the large screen at the gantry how much you have left on your SimplyGo EZ-Link card.

This may seem a small matter to the Land Transport Authority, which probably believed that people can check later either at the station or through an app, but clearly it has underestimated the wish for a receipt. People want to feel they are in control, of not being overcharged.

Yet again, the authorities have chosen a more flexible technology that is future-ready but it seems they should have spent more time managing the transition and perhaps explaining their decisions.

Could Singapore have taken a different route, like in Japan, to make such payments more common? It’s hard because of some lasting issues – fragmentation, plus a small market.

Note that Japan has stuck to its FeliCa technology instead of a similar account-based technology that Singapore has gone with.

How is it Japanese users can tap their phones at a gantry to get out? That’s because most Japanese phones come with a FeliCa chip, which is similar to having a physical contactless card on your phone. Integration is key here.

In recent years, the FeliCa standard has also been opened up to some international users, in particular, Apple iPhone owners who could pay with their phones when visiting Japan.

So, the standard is evolving from one being used in a stored-value card to more “regular devices” not made specially for Japan. This is now possible as long as there is a “secure element” – like a virtual vault – in a phone that meets the Japanese requirements.

Why can’t Singapore have this? For one, the market is too small to mandate that phone makers add a smart chip in all the models shipped here.

It’s not for want of trying, though. Just a few years ago, Singapore also tried something similar with a smart SIM card that acted like a stored-value chip on a phone. Yes, similar to what’s used in Japan’s FeliCa.

Unfortunately, that was short-lived. To change to this advanced SIM card that held a virtual ez-link card in it, telecom operators would charge you a fee of more than S$30, plus an activation cost.

The app interface for that was also a little basic. Without critical mass behind it, who wanted to spend time developing software for it?

So, the latest woes with SimplyGo EZ-Link are yet another reminder why contactless payment has been such a downer in Singapore, even as it has taken off elsewhere.

Thanks to a fragmented market early on with Nets and EZ-Link, the country didn’t take advantage of the head start that it had from adopting the right technologies decades ago.

And having failed to ignite any mass adoption outside of transit like in other places, the authorities now have to turn to a more flexible system that opens up new payment options.

The downside, as is clear this past week, is that consumers have been asked to switch to a new system while important issues remain.

Could the authorities have let the existing cards expire before deciding to shut down the old system, which has run alongside this SimplyGo one since 2019? And how is it that concession cards used by students and seniors don’t need changing out?

Without good answers, citizens will think the authorities are just pushing ahead with digitalisation, cutting costs for themselves without considering the costs to consumers. That’s not going to win them over.

[UPDATE at January 17, 2024, 12:40am: The story has been updated to better reflect the use of FeliCa technology in mobile devices in recent years.]