After a bearish year for cryptocurrencies, 2019 got off to a start with some good news for crypto enthusiasts. Singapore saw its first major crypto purchase when businessman David Lau purchased a car using Ethereum (ETH).
Paying $10,000 in ETH upfront, Mr. Lau was able to drive off in a $84,000 Honda Vezel. An additional $32,000 will be paid in ETH over several weeks with the remainder financed with bank loan. The vehicle was purchased from MHG Cars, the first dealership in Singapore to accept cryptocurrency. Although the transaction was a first for Singapore, this is not the first time a car has been purchased using cryptocurrency. Last year in September, Houston-based Post Oak Motor Cars sold a Bently Continental GT to a successful local restauranteur.
Lydia Ang, director of MHG Cars, spoke glowingly of cryptocurrency’s potential, citing the low transaction costs and payment confirmation times. “It does make us stand out from other dealers in the automotive industry. Being able to be the first car dealer that offers this payment mode shows that we have taken a step ahead of our competitors.”
Facilitating the transaction was Bizkey, a Singapore-based crypto payment solution provider which collects crypto payments and returns cash to merchants. Two months prior, Bizkey held a promotional event called “Token Day”, a misnomered three-week campaign allowing crypto payment at 30 shops and restaurants in Singapore’s Chinatown area.
“We are excited to expand into large-scale payment applications,” Bizkey CEO Ken Huang explained. “We are actively looking for partners in the luxury goods space, gold purchases, even real estate.”
Others are less enthusiastic. Mr. Chia Hock Lai, President of the Singapore Fintech Association, weighed in upon hearing about Mr. Lau’s purchase. “Transactions using cryptocurrency outside of investment are not common here, especially for such large amounts. It’s sometimes used for purchases at cafes or eateries, but even then, it’s uncommon in Singapore.”
Due to cryptocurrency’s bottleneck on transaction speeds and scalability, market penetration in the fast-moving consumer goods sector has indeed been slow. More than ten years after the start of Bitcoin, there are less than 100 merchants that accept crypto payment in Singapore. Secure transactions in Bitcoin and Ethereum require approximately 60 minutes and 5 minutes respectively to confirm, although shorter times can be utilized at the expense of security. While this limitation may keep crypto out of the grocery store, large money transfer services may represent an opportunity for crypto currencies to compete. Bank transfers may require large fees and several days to confirm, but the ETH native “gas fee” for Mr. Lau’s car purchase was only 20 cents. Bizkey charged 1% for the payment service, whereas the typical credit card fee is 2-3%.
New regulations are being crafted by Singapore’s Parliament, and a licensing system is underway at the Monetary Authority of Singapore. According to the MAS website, the Payment Services Bill will empower MAS to regulate payment services to tackle the concerns of “money-laundering and terrorism financing, loss of funds due to insolvency issues, limitations to interoperability, and technology/cyber risks.“
“It’s good to have regulation,”Ken Huang says. “A regulated market is more trusted and standardized, which is good for adoption of cryptocurrency for payment purposes. We hope to work with MAS to obtain the first batch of licenses.”
In Singapore, there’s no denying the buzz. News of the car purchase grabbed headlines, including The New Paper, Asia One, and Singapore’slargest Chinese newspaper Lianhe Zaobao. MHG Cars, barely two weeks in operation, managed to market themselves to 750,000 Singaporeans by simply expanding their payment options.
Bizkey has developed a feature-ready platform, introducing intelligent blockchain-based point-of-sales (POS) systems that support all forms of fiat and crypto payments. By acting as a digital currency wallet, this will empower businesses and bring them into the digital era. Bizkey already has over 500,000 merchants signed onto their platform.