Vision 2020: Open Payments for Southeast Asia

Team Xfers
November 22, 2019

Samson Leo, Co-Founder and Chief Legal Officer spoke at Deloitte’s Global Financial Crime Symposium on the evolving payments landscape.

Samson Leo, Co-Founder and Chief Legal Officer at Xfers, was invited to speak at Deloitte’s Global Financial Crime Symposium on the changing payments landscape. Some 200 practitioners from the financial industry attended the event on November 5, 2019 at Raffles Hotel, Singapore, including Heads of Compliance, Heads of Risk and Internal Audit, Senior Legal and General Counsel representatives, Heads of Investigations, Business Leaders, and Senior Innovation Leads.

Below is a summary of the Q&A session:

Q: When you founded Xfers in 2014, what was your goal and motivation?

A: Our vision is an open banking ecosystem supported by open API. The current payment landscape can be described as “walled gardens”. For example, if you’re a DBS customer and you want to open a Grab account, you need to go through a full KYC process again — even after DBS did it previously. This is a common pain point — there is no easy way for users to move from gardens to gardens with ease. So we aim to break down these walls and improve the experience for both consumers and merchants, to make it seamless and convenient. To achieve this goal, we will build an inter-operable ecosystem for various industry players, that’s our vision of “open banking supported by open API”.

We’re excited to see governments taking the lead to break down these walls — in Singapore, we’re lucky to have MyInfo (government issued digital ID) as well as the upcoming PDPC’s data portability provisions to make the customer experience more seamless.

Q: Can you share how Xfers is preparing for the upcoming Payment Services Act (PS Act), and your interactions with regulators in general?

A: The starting point is to understand the Monetary Authority of Singapore’s 4 underlying principles of the PS Act which are:

(a) money-laundering and terrorism financing (“ML/TF”);

(b) consumer protection;

(c) fragmentation and limitations to inter-operability; and

(d) technology and cyber risks.

We’ve been proactive in providing feedback to MAS, especially about the challenges of implementing the PSA as we foresee. Under the new PS Act, Xfers will become a Major Payment Institution directly regulated by the MAS. Overall, our interactions with regulators have been positive.

Since the PS Act is slated for January 2020, we’ve recently examined our product lines, and categorized them according to the 7 activities to be regulated by the PSA. Our Product Refresh Initiative was a great success — we looked at both:

(1) tightening certain controls; and

(2) relaxing certain requirements in line with the new regime. For example, we were able to leverage certain exemptions for low risk transactions. Currently, the stored value limit is $1,000 for payment transactions with the Xfers Wallet; to load more, the customer have to go through the Customer Due Diligence process. This becomes a problem when a consumer orders a TV, he is forced to go through the KYC process. Out of convenience, he will choose credit card payment, but he may incur additional fees as a result. So we’ve identified certain thresholds and redesign our payment flows; now we’re better positioned to bring greater convenience and flexibility to both merchants and consumers.

Q: Anything exciting you’re planning for 2020?

A: Yes, we have big plans for Distributed Ledger Technology (DLT). Whilst the hype has been around for a few years, this year, we’re truly seeing the practical use of it. It helps reduce risks of business continuity and a single point of failure. It also makes transactions independently auditable. We’ve piloted a new DLT product at the Singapore Fintech Festival, and will roll it out next year. Our vision is to enable open banking with a common ledger amongst industry players in 2020. So stay tuned!

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