MAS Orders Qoo10 to Suspend Payment Services

By
Gowri Rajaratnam
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E-commerce giant Qoo10 has just been instructed to suspend any payment service it covers in Singapore. 

The Monetary Authority of Singapore (MAS) has just issued a statement directing retail giant Qoo10 Pte Ltd (Qoo10) to suspend its payment services from 23 September 2024 onwards. 

While Qoo10 can continue operating its e-commerce platform, it can no longer offer any of the seven services covered under the Payment Services Act 2019. Instead, a third-party payment service provider would have to be engaged for any transactions on Qoo10.

As it has no third-party provider so far, transaction on Qoo10 is effectively halted.

So, what is the Payment Services Act 2019?

The Payment Services Act 2019

There has been a recent growth in the type and number of digital payment services that make the process faster and easier, like Digital Payment Tokens (DPT),  e-wallets and money transfers. However, this ease has led to a new wave of risks, like money laundering, cyber threats and fraud. 

The Payment Services Act was rolled out in early 2020 to address these new risks and to protect consumers and merchants alike. Once it came into force, MAS required businesses that provide any of the seven kinds of payment services to hold licenses under this act in order to operate. 

New businesses had to apply for the license before they could commence operations, but leeway was given to existing payment service providers like Qoo10 who were allowed to continue offering these services while their license applications were being reviewed. 

The seven kinds of payment services are

  • Account issuance service
  • Domestic money transfer service
  • Cross-border money transfer service
  • Merchant acquisition service
  • E-money issuance service
  • Digital payment token service
  • Money-changing service

Multiple Merchant Complaints

So, why the suspension? From April to August 2024, MAS and other government agencies received several customer complaints from Qoo10 merchants against the company for delays in processing their payments.

Several long-time vendors even came forward to the media with police reports against Qoo10, claiming they were waiting for payments in the thousands. 

When asked to address these complaints by MAS, many cases still remained outstanding, and in early September, Qoo10 informed MAS that a significant number of merchants would still face payment delays. 

In response, MAS held discussions with Qoo10’s management, making it clear that they had serious concerns about the payment delays and even suggested that the company bring in a third-party payment service provider so that Qoo10 could “meet its obligations to merchants on an ongoing basis”. 

Despite the help and guidance offered, the company was unable to give MAS enough assurance that they could and would be able to continue to pay their merchants without delays.  

So, after careful consideration of the disruption this could cause to the e-commerce platform and to avoid exposing more merchants to potential losses, MAS moved to suspend their covered payment services.

MAS confirmed that “Qoo10 will be permitted to make payments to satisfy outstanding claims by such merchants, but may not take on new payment obligations”.

So basically, they can pay others but not receive payment.

As mentioned earlier, this suspension doesn’t stop Qoo10 from running its e-commerce platform. However, they’ll need to use a third-party for any payment services while their suspension is underway.

For example, they can use Paypal as their payment service.

The suspension might only be reviewed once Qo100 is able to prove to MAS that they have a system in place to “resolve the payment delays and safeguard the interest of its customers in Singapore on an ongoing basis.” 

If merchants continue to face delays, MAS encourages them to continue to raise their concerns with Qoo10. When that fails, they can consider filing a civil claim with the courts or applying for a capital loan under the Enterprising Financing Scheme.

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Gowri Rajaratnam