The Monetary Authority of Singapore (MAS) has ordered Singapore’s online marketplace Qoo10 to suspend its payment service, in the wake of mounting complaints from merchants about delayed payments.
The authority said in a statement on Monday that this action was taken under the Payment Services Act, after the company failed to provide sufficient assurance that it had the resources and systems to meet its payment obligations to merchants on time.
However, it is important to note that while this suspension affects Qoo10’s payment processing capabilities, it does not prohibit the company from operating its e-commerce platform. It will need to engage third-party payment service providers.
The regulatory action didn’t come out of the blue. The authority said that between April and August 2024, MAS and other government agencies received numerous complaints against Qoo10 for delayed payment processing.
“Qoo10 was asked to address these complaints, and while some were resolved, others remained outstanding,” according to MAS’s statement.
The situation then reached a critical point early this month when Qoo10 informed MAS that a significant number of merchants would face payment delays. This admission prompted serious concerns from the authorities and led to a series of engagements with Qoo10’s management.
Qoo10’s case sheds light on the complex regulatory environment surrounding digital payment services in Singapore. The company had been operating under an exemption to the Payment Services Act, which came into force in 2020. The exemption allowed existing payment service providers to continue their operations pending the review of their licence application by MAS.
This suspension underscores the delicate balance regulators must strike between fostering innovation in the fintech sector and protecting the interest of businesses and consumers.
The authority said it has had to carefully consider the potential disruption the suspension could cause to Qoo10’s e-commerce platform or other services that are integrated with the covered payment steps.
MAS stated that Qoo10 will be permitted to make payments for outstanding claims and provide some relief to affected merchants. Merchants facing ongoing payment delays are advised to raise their concerns directly with Qoo10. For unresolved disputes, there are established processes in place, including the option to file a civil claim with the courts.
“MAS will review the suspension when Qoo10 is able to satisfy MAS of its ability to resolve the payment delays and safeguard the interest of its customers in Singapore on an ongoing basis.”
Lastly, for merchants who face cashflow difficulties, MAS has asked them to apply for the Enterprise Financial Scheme (Working Capital Loan) through the financial institution listed on Enterprise Singapore’s website.
This issue was relayed with its subsidiaries in South Korea —Ticket Monster and WeMakePrice—back in July, and even filed for corporate rehabilitation in the Seoul Bankruptcy Court. South Korean government officials estimated that both companies owed at least 213.4 won (about $154.2 million) to over 2,700 merchants who did not receive their May payments.
In its home base, the company laid off more than 80% of its workforce in August.
Qoo10 was founded in 2010 by South Korean national Ku Young-bae. It operates in multiple countries, including Singapore, Japan, China, Hong Kong, Malaysia, and Indonesia.
