Comparing eGIRO With Other Business Fund Transfer Methods
The world of corporate finance has been introduced to many breakthrough developments, and eGIRO is one of them. eGIRO can be thought of as a big fish in a small pond of instant fund transfer methods in Singapore. Unlike GIRO, eGIRO brings the convenience of instant interbank fund transfers, which has been widely praised amongst businesses of all scales.
What is eGIRO?
Although eGIRO isn’t a replacement for GIRO, it can be thought of as a successor. GIRO was traditionally a slow and paper-based fund transfer method that businesses widely used before the introduction of eGIRO. eGIRO, on the other hand is a cloud based payment system that enables paperless and instant fund transfer between two bank accounts. It was made by the ABS along with eight major banks of the country to mainly be used for making recurring payments.
Other than eGIRO, there are five major electronic fund transfer methods available to businesses operating in Singapore. Those are:
1. FAST: FAST stands for Fast And Secure Transfer. It is used to transfer SGD from one bank account to another. Thus, it’s mainly used for domestic commercial transactions. Initially, there were 24 banks participating in the FAST system during its launch in 2014. Later, non-banking financial institutions also became a part of the FAST system. It’s important to note that FAST is not commonly regarded as a payment method. It rather is a payment infrastructure.
2. PayNow: PayNow uses the FAST system to transfer funds between two bank accounts using just the recipient’s phone number, virtual payment address or Singapore FIN. In other words, businesses no longer need to know sophisticated bank account details. PayNow can be used in tandem with India’s UPI and Malaysia’s Duitnow system to enable cross border payments. However, only a few banks support this.
3. MEPS+: Launched in 2006, the MAS Electronic Payment System is an interbank fund transfer method that facilitates payments in SGD. Nearly all leading banks in Singapore support business fund transfers using MEPS.
4. Telegraphic Transfer: Telegraphic Transfer is used to transfer money across borders. This makes it a widely accepted fund transfer method for Singaporean businesses that work with international clients.
5. SWIFT: Like Telegraphic Transfer, SWIFT is mainly used by businesses to transfer money globally. It operates as per Belgian laws because the Bank of Belgium is the main regulator of SWIFT. Nonetheless, it is also regulated by the Monetary Authority of Singapore and other regulatory bodies around the world.
Now let’s compare the other electronic fund transfer systems with eGIRO:
- Speed of Fund Transfer:
eGIRO, as well as FAST, MEPS+, PayNow and SWIFT allow instant or near-instant electronic fund transfers between participating banks. On the other hand, Telegraphic Transfer can take anywhere from 1-5 business days. It’s important to note that commercial eGIRO transfers may take up to 48 hours to be settled.
- Availability:
SWIFT, PayNow, FAST, and eGIRO are available round the clock. Businesses can make payments even beyond the business hours quite conveniently. Conversely, MEPS and Telegraphic Transfers are limited by banks’ operating hours during weekdays.
- Purpose:
PayNow and FAST have a smaller upper limit than MEPS, making them more suitable for small vendor payments. MEPS can be used for larger business transactions with other Singaporean businesses. eGIRO, SWIFT, and Telegraphic Transfers generally don’t have a pre-set limit, although there may be a limit depending on the bank that the business account is associated with.
eGIRO, FAST, MEPS, and PayNow are used for making general domestic business payments. SWIFT and Telegraphic Transfers can be used to transfer money internationally.
The choice of a suitable payment system comes down to a business’ own preferences and needs. Before going ahead with any payment system, businesses should consider:
- Whom they’re making the payment to – Some payment methods don’t support international fund transfers.
- When are they paying – Not all payment methods are available at all times.
- How urgent is the payment – The transaction speed differs between different payment systems.
- How much is the amount they want to pay – Different fund transfer methods have different upper and lower limits.
- How much they would have to pay as a fee associated with their chosen payment method – Different banks may have different charges for the use of different payment methods.
To conclude, there are six major business payment systems in Singapore. Each has its own purpose and limitations; thus, businesses should do their due diligence before choosing a fund transfer method.
