A alter to electronic payments will aid Singapore in its ambition to become a ‘smart nation’, Monetary Authority of Singapore (MAS) managing director Ravi Menon said in a speech to a conference on fintech and financial inclusion.

MAS has place together a ‘roadmap’ in collaboration with KPMG, laying out the strategies it will operate to encourage electronic payments including simplifying and strengthening the regulatory framework, and establishing a fresh governance model for payments.

A single regulatory framework should be developed that can be applied on an ‘activity’ basis rather than relating to specific payment systems, MAS said. This will handover MAS flexibility to address fresh risk areas as they arise, and will also promote innovation and encourage non-traditional fintech players to offer fresh services, it said.

The report also recommends developing a fresh governance model and setting up a fresh national payments council. This council would be made up of both users and providers of payment solutions and would promote interoperability and common standards.

Singapore is already in a good position, with “earth class” underlying infrastructure and unit of the highest mobile penetration rates in the earth, yet the operate of cash and cheques remains high, Menon said.

Cash in circulation in Singapore is 8.8% of GDP, compared to 4.4% in Australia and 2.12% in Sweden, and 12.7 cheques per person were written in Singapore in 2014, compared to 7.1 in Australia, Menon said.

“In Sweden, the total number of cheques issued is so small that it is effectively zero on a per person basis,” he said.

“The economic cost of this heavy reliance on cash and cheques is not trivial. Our studies estimate that the social costs of cash and cheques is around 0.5% of GDP, or about S$2 billion (£1.1 billion) per year. A good portion of these costs can be attributed to the cost of securing cash, both in transit and in storage, and processing cheques,” Menon said.

The industry already has infrastructure projects underway that “own the potential to transform the payment landscape for recurring, retail and peer-to-peer payments” with interoperable solutions, MAS said.

“These include enabling more convenient payments through a centralised addressing system and creating a seamless consumer experience with unified point-of-sale payment terminals,” it said.

MAS will run a public consultation on the framework and the council over the next week, it said.

Technology law expert Bryan Tan of Pinsent Masons MPillay, the Singapore joint venture partner of Pinsent Masons, the law firm behind Out-Law.com, said: “The identified potential to develop electronic payments services is massive and a fresh regulatory infrastructure aimed at fostering innovation and fresh entrants is a tremendous opportunity for the fintech industry. The even larger prize would be the regional market which is undoubtedly watching these developments carefully.”

MAS has been promoting the operate of application programming interfaces (APIs) by financial service companies in Singapore to build better operate of data.  APIs permit software applications to interoperate with each other. MAS also announced its own plans to build its data available to financial firms to exploit through APIs.

MAS launched a fresh FinTech Office in Singapore in May, providing guidance to financial technology companies looking to set up in Singapore on the availability of government grants and helping to promote Singapore as a financial technology hub.