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Lessons from a failed mobile payments startup in Singapore




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Everybody loves to hear a story of David vs Goliath, of how the little guy went up against all odds and defeated the big boys. Unfortunately, this isn’t one.


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This is a story of how a startup failed – our struggles, the ups and downs, and the lessons learnt. This is the story of Spence.

The Inception

In late August 2016, a group of friends and I were looking to participate in a hackathon organized by NUS Enterprise. As interns enrolled in the NUS Overseas College Singapore (NOC) progamme, we were all fascinated by the hackathon-turned-unicorn journey underwent by many successful startups, and some of us were similarly looking for our big break. As a team of five we started brainstorming for possible ideas, and we each took turns to share some personal problems we faced and the proposed solution. I recalled my previous 4-month stint in Shanghai where I experienced first-hand the convenience of mobile payments, and decided to propose working on a solution for Singapore which we collectively agreed to. Back then, there weren’t many mobile-to-mobile payment solutions, and almost nothing catered to the needs of commonly-frequented small business owners which we identified as our niche.

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For the next few days prior to the hackathon, I spent sleepless nights lying in bed thinking of the user experience for our mobile application. It had to be really easy-to-use for merchants who tend to be less tech-savvy, and something that requires minimal intervention so that they can focus on the other aspects of work without having to fuss over payment collection. Come 9th September, our HackfestSG team worked tirelessly on the MVP and we won the ‘Most Creative Award’ during demo day on the 12th.

Also Read: Startup failure should not be a stigma, says Vijay Ratnaparkhe, President and MD of Robert Bosch Engineering and Business Solutions

After the hackathon, a group of us went ahead with consumer and merchant validation as part of an entrepreneurship module in NOC. Between September to early October, we went around NUS interviewing 100+ consumers and 30+ canteen vendors, soliciting their feedback using the prototype we made during Hackfest. The validation outcome turned out to be overwhelmingly positive, and I was encouraged to pursue this project further beyond academic scope. I applied for the $10,000 NUS Innovation and Entrepreneurship Practicum Grant and called up NUS Office of Campus Amenities (OCA) to request an audience for our proposed cashless project to be implemented across NUS canteens, both which were subsequently granted to us.

Just as things were starting to gain some traction, I encountered the first few hurdles of many to come. After our meeting, OCA was not convinced by our project as we quoted high transactional fees of 3-4% to cover the projected credit/debit card-processing costs. Meanwhile, I struggled to keep the team intact as each of us had different aspirations and some were not as keen as I was to pursue this as a startup company. Nonetheless, I was adamant in my belief that this project would benefit Singapore, and forged ahead to apply for the $50,000 ACE Startup Grant (now Startup SG Founder) administered by Spring Singapore, which was awarded to me in December. I also began recruiting a new team through LinkedIn, even resorting to distributing flyers at events. By January 2017, I have met and faced rejections from 20-odd potential teammates before arriving at the initial team of 6, and development on the Spence app officially began.

Between January to May 2017, some people left due to school commitments and some others joined. The core team of 5 worked tirelessly on the development of the Spence app, sacrificing weekends and even sleep for many months. Meanwhile, I refined our business strategy and decided to go with iBanking for Spence wallet top-ups, allowing us to significantly reduce transaction fees for merchants to less than 1%. OCA was satisfied with our proposal, and allowed us to launch a two-month trial at The Deck which began in May 2017.

The Challenges

Slow Adoption

When we officially launched on 15th May 2017, things did not turn out as we expected. Adoption was slow and many people were unaware of our existence despite the multiple posters that we put up across the Deck canteen. Even for those who were aware, some were not keen to download an app just for use at one canteen. We resorted to running multiple campaigns to gain awareness and incentivize user adoption, which worked initially and brought in hundreds of new users. We also managed to get ourselves featured in NUS News, which helped spread the word about Spence. The merchants started to see a spike in usage of Spence, and many of them were really excited about the increased uptake. However, we faced multiple challenges that hindered user retention. There was a critical bug in our Android app that led to frequent app crashes and brought us our first 1-star rating on the Play Store, and many users also felt that iBanking top-ups was too inconvenient for them. As a result, half of our users dropped off at the top-up stage, and we couldn’t incentivize these groups of people to carry on using Spence despite our efforts.

Week-by-week, our user numbers declined and the merchants started to show signs of dissatisfaction with Spence. Some would report to me their daily revenue collected through Spence whenever I dropped by for lunch, which became my daily dose of demoralization. “Perhaps we would fare better if we were allowed to launch campus-wide so that the Spence app becomes more relevant to users, maybe then they would be more willing to go through the top-up process”, I thought to myself, “Our sponsorship agreements with four upcoming freshmen orientation camps in August would surely bring up our metrics as well”.

Also read: After launching our product, here are lessons learned about products and customers

In end-June after our trial period, I went back to OCA with our results and negotiated for them to allow us to launch Spence across all canteens in NUS. During that session, they agreed to our proposal but also said they will allow other entrants into NUS. Their comments made me uneasy, but my sources told me it was some other small company and I believed we could still defend our position if we move quickly enough. Over the next two weeks we went around speaking with the merchants across the other canteens to solicit their feedback and seed the idea of cashless payments, while we waited for the official briefing organized by OCA. It was during this time I found the urgent need to have Wi-Fi support by NUS in order for us to successfully implement across all NUS canteens.

Wi-Fi concerns

On the morning of 11th July, I contacted NUS IT Care to request for Wi-Fi support for our campus-wide rollout. I requested for a set of merchant Wi-Fi credentials and also for improved network coverage at the area near the stalls, both of which were necessary for cashless payment collection through Spence. Many of the canteen merchants either do not have mobile data plans, or intend to dedicate a spare mobile device to access the merchant cashier dashboard. This was the case for our existing pool of merchants at The Deck, and as a temporary measure I provided them with access to the school network using my own set of NUS Wi-Fi credentials which was due to expire soon post-graduation.

This, of course, I found later to be a mistake as I was not supposed to share my Wi-Fi credentials with anyone according to the school’s Acceptable Use Policy. As such, I had to remove merchants’ access to Wi-Fi and some were unable to verify incoming payments on their own devices due to lack of Internet access. The backup plan of leveraging on payment receipts through users’ phones was not an ideal solution as it holds up the queue and was unable to provide the same visual assurance compared to our merchant dashboard. Some of the stallholders had difficulty understanding the backup method and resorted to telling users our Spence app was malfunctioning, dealing a blow to consumer confidence.

This carried on for more than a week, before we were able to obtain 5 sets of visitor accounts for use by The Deck merchants. However, the NUSOPEN visitor accounts had a login authentication procedure that was difficult and impossible for the less tech-savvy merchants. Topped off with the fact that it disconnected frequently, the Wi-Fi problem remained unresolved.

Introduction of a huge competitor

As the Wi-Fi saga dragged on, I received another devastating news on July 21st that OCA is looking to introduce a major competitor into NUS, in the form of DBS PayLah. They are set to enter NUS in 2-3 weeks’ time, which came as an abrupt shock and leaving us with little time to come up with counter-strategies. We are just a group of students, up against Asia’s largest bank. My mind went into overdrive that weekend.

“PayLah does not have our merchant-centric features and will not be helpful to our canteen vendors”.

“I have spent months building relationships with the merchants at The Deck, surely they will support me in such times of crisis”.

“We have a host of app features in the works that will surely entice users to pay with Spence rather than with PayLah”.

I consulted friends and family, many of whom advised me to call it quits and cut our losses early. I consulted my mentors from NUS Enterprise, who opined that we stand little chance against DBS and that an exit would be a logical choice. However, I wasn’t keen on giving up just yet, desperately trying to find a reason to keep up the fight. I found one in my team, who collectively decided to carry on with campus-wide implementation to observe our uptake, especially since our app was just about to receive a major revamp.

We persevered for another week, heading down to each of the canteens to onboard the merchants individually in preparation for campus-wide implementation slated for the following Monday. However, the last of my resolve broke when I found on Thursday that PayLah is being introduced to all merchants next week, with registration documents being made compulsory for the sessions. Although PayLah was not compulsory for the merchants, the collation of documents was a big step and DBS could simply use cash incentives to onboard the merchants in one fell swoop. This effectively meant that we have zero head start against DBS in terms of campus-wide implementation. We lost the battle even before we could pick up our weapons. That weekend, I announced our decision to withdraw from NUS campus.

The Lessons Learnt

Barriers to Entry is high for payments industry

In Singapore, the barriers to entry for running an e-wallet payments startup is pretty damned high. Unlike in countries like the US where banking APIs are made available for use by startups, we do not have access to the pieces of the puzzle that could give us a good shot at success. This meant that we could not pull-off a Venmo, which thrived as a low-cost and scalable business popular among millennials. At the same time, card-processing fees here are an exorbitant 2-4%, unlike in the UK where fees are capped at 0.2% by regulators. Small business owners are not willing to pay such high fees, a contributing factor to the prevalence of cash in Singapore. In order for us to engineer a sustainable solution for our identified niche, we had little choice but to stick by the iBanking method for Spence, an instant level-up to the difficulty we faced both in terms of development and consumer adoption.

Consumer behaviour is driven by monetary incentives

If a business involves changing consumer habits, it is usually a capital-intensive business that involves monetary incentives. Otherwise, the problem being identified has to be painful enough for consumers to want to adopt a proposed solution. Unfortunately, we are neither well-funded nor is the problem we identified painful enough for consumers to want to adopt Spence. For many born-and-bred Singaporeans, cash has been ingrained into our spending habits since young and we have been accustomed and desensitized to its inconvenience. We hardly stop to think twice about the hassle of giving and receiving change, and queueing at ATMs is hardly a concern with these cash withdrawal machines at every turn of the corner. This, on top of the fuss of iBanking, meant trouble for our user-acquisition. We could resort to monetary incentives, but that is not sustainable for a startup like ours without financial backing.

Vinnie from Golden Gate Ventures once said to me, “You’re in an area where you’ll spend more time educating your users rather than actually doing business. This is not an area you want to be in as a startup”. This is priceless advice to us, a revelation I wished we knew earlier before taking the leap of faith.

Validation of the problem is the first step

Validate your problem, not your product. This is also something we learnt the hard way, blatant after a failed venture. When we first set out on our validation project, we already had a product ready in our hands, eager to obtain feedback on our proposed solution. In hindsight, it could very well be the case that our validation was geared towards the product and less so the problem, which skewed our validation outcome. Thus, we overlooked the possibility that the problem we identified wasn’t strong enough a pain point for users to take action, a critical mistake we made from the outset.

Broken promises are commonplace

As we transit from sheltered school environment and into the realm of business, we find that things are not always as they seem. Broken promises and unfulfilled agreements are just the beginning, there will be people who patronize you with feigned excitement only to become uncontactable later on. Words from potential business partners, strategic partners and even investors, we learn to take with a pinch of salt. Naivety is the recipe to downfall.

Know when it’s time to quit

Even though we had plenty of runway left due to our prudent usage of funds, I felt that there was no point in us keeping up the fight against the likes of DBS. We had a number of cool app features in the works that would significantly differentiate us from PayLah, but they could one-up us simply by tossing more money into the game. Being a bank, money is their game, and it is futile for us to try and beat them at it. Instead, I chose to live and fight another day.


I know, acknowledgements are usually done by people who have attained success in their respective fields, and it seems counter-intuitive that I as a failed startup founder am writing a section like this. However, I find it important to recognize the people who have helped us in different ways, and hope to extend my sincere appreciation to these groups of people for their contribution.

Office of Campus Amenities

To Jeslin, Kang Rui and Wendy, for believing in me when I first approached you nearly a year ago with a crazy idea. Thank you for giving us a chance to trial our solution at The Deck, along with it bearing the risk of us pocketing the money and never returning. Although the introduction of DBS effectively led to our demise, I fully agree that allowing PayLah to enter NUS quickly is the logical choice to advance OCA’s cashless movement. I stand by your decision and dare say I would do the same if roles were switched.

NUS Enterprise

To Sang, Chong Yee, Hui Min, and the amazing staff at Hangar, for your support through the good times and bad. Thank you for giving me a shot through the incubation programme, a stepping stone taken by many successful startups local startups.


To Nelson and team for understanding our Wi-Fi needs and going through the trouble of deploying a functional solution for us within short notice. Your help is very much appreciated.

Spence team

To my treasured teammates who fought alongside me, sacrificing and contributing your time to Spence. Thank you for believing in me and in the vision we had to enable a truly cashless society. We had big plans coming up for us, not expecting DBS to come up with their own version of QR code payments just as we were about to launch. They say the key to success is ‘Right People, Right Place, Right Time’. I have no doubt in my mind that I couldn’t have chosen a better team.

Merchants & Users

To the merchants at The Deck who believed in us and supported us, and to our loyal users who kept using Spence for your lunch payments. You have made our struggles worth the while, and it has been immensely satisfying for us whenever we chanced upon someone paying with Spence. We are sorry that we had to make such a hasty exit and are unable to continue serving you. It is our hope that someday, someone can do it better.

Also read: Failed entrepreneur’s bogus crowdfunding campaign raises questions about post-’90s entrepreneurs

Ending Note

Looking at the payments landscape in Singapore, with the restricted banking APIs and high card-processing fees, banks are best poised to advance the cashless agenda especially for small business owners. They have the right resources to provide a scalable solution and to incentivize a change in consumer habits where fledging startups can’t. Other possible contenders for the payments space include the people who already have a large consumer base acquired through their core business, we’re looking of course at Grab and Fave. Heeding the advice from Nikhil of Gree Ventures, “Payments is not usually done by startups. If you look at the really successful examples like Alipay and WeChat Wallet, they usually start from something else”.

However, it is important for banks to continuously innovate and truly understand their users’ needs. It is not enough to mask flaws with money, and I do hope on behalf of the small business merchants that the respective teams will be able to create merchant-centric features rather than just plug-and-play their C2C payment system for C2B payments. At some point in time, this could turn on its head as the merchants start to realize faults in the user experience. If this happens, a window of opportunity would open up for the above-mentioned late-stage startups, and a destructive battle would ensue.


The post Lessons from a failed mobile payments startup in Singapore appeared first on e27.
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