One reason to counteract this is because a statement we hear often lately is that the part of the knowledge battle is being won by China

Some see the Southeast Asia expansion itself as a boil-the-ocean strategy thought up by Nadiem Makarim, Gojek’s former CEO, who is now a government minister. (We wrote about Makarim’s exit from Gojek here .)

Devolution of powers

Gojek took an unusual approach to its expansion. It set up overseas operations that are run by local teams with Gojek Indonesia providing tech support. This strategy allows the interface of its local apps, their features, marketing and other facets of the business to vary from country to country. Grab, in contrast, operates one core app across Southeast Asia, although some features vary between countries

The expansion strategy may appeal to investors, but it is impractical, even harmful, to the company in reality, as catching Grab is both ambitious and costly, the technology executive mentioned above added. Indeed, it has been speculated that Gojek’s regional expansion could be as much about distracting Grab away from Indonesia as it is about landing in new territories.

However, it is unclear whether Gojek has made a dent in Grab’s monopoly in the Southeast Asia region. And the Indonesian company’s home base is also under fierce attack from its rival.

Grab has pledged to pour vast sums into Indonesia. The Singaporean company’s marquee investor, SoftBank, has palled up with the Indonesian government, while committing $2 billion towards developing national infrastructure. There are even suggestions SoftBank will help fund a new capital city.

Organised chaos across Southeast Asia

After stepping into Vietnam in August 2018, the company said its local Go-Viet business completed 100 million bookings in its first year. However, despite the bold claims, Go-Viet appears to be in a near-constant state of flux. It is currently in its third leadership cycle following a turnover of executives, which hints at instability and lack of coherent strategy.

Former Go-Viet chief executive Christy Le, who was earlier Facebook’s Vietnam head, resigned in September 2019 after just five months with the company. Her predecessor, Nguyen Vu Duc, had barely fared better, lasting only six months in the role.

Grab retains a dominant 72.9% share of the ride volume in Vietnam, according to a recent report by ABI Research. Go-Viet is pegged at 10.3%—just fractions ahead of local players Be and FastGo.

There are also reasons to be concerned about the management of country teams. In Vietnam, the entire annual marketing budget for the first year was exhausted after just three months, the previously quoted person said, indicating a lack of oversight.

In Thailand, the country Gojek entered following its expansion to Vietnam, there are signs that decisions are made in Indonesia. For example, GET initially worked with capital city Bangkok’s motorbike taxi driver fleets—known locally as Win bikes—despite the approach being costlier than developing its own fleet, an executive from the logistics industry told us. “A local leader wouldn’t do that,” the executive said. “This was a strategy set by Indonesia.”

Gojek has provided a limited window into the success of its service outside of Indonesia, but it does claim the following:


Possible Future Endeavors for the REST Server for Circles

Customers in Australia also complained about the service—from double billing to slow speeds. Bad reviews on product sites significantly outnumbered the good. Tellingly, the source also revealed that subscriber numbers are low in Australia—there were just 25 customer activations in February 2020. Although numbers are said to be picking up, today, only three people are left from a team that was 25-strong—a marketing person, sent from Singapore; a single customer service representative; and the former general manager of Australia, who is now working on ad-hoc projects.

Ironically, Circles’ lack of a physical footprint—something it has long considered an advantage—may have hurt its overseas ventures. “Not having stores sometimes hurt its credibility and subscribers are not confident about the kind of service it can offer. [This can] Often result in slower growth in markets, or it will have to roll out aggressive promos like it did in Australia, with its four-month free offering,” said Batra. Circles doesn’t even sell its SIM cards at stores.

Circles’ Bengaluru centre, too, saw a similar fate.

Cuts and bruises

Bengaluru, which was supposed to be a centre to develop applications outside the telco business, saw a hiring surge in May 2019. “But over months, that really did not take off, I guess, and the office sort of became a back office for their Singapore operations,” said a former employee, who was laid off from the Bengaluru centre..

There was a management struggle, where local executives had no real power, said the person quoted earlier. Singapore was pulling the strings. Things started going downhill when Dhanush Hetti, the new chief technology officer, came onboard. The management made employees work extra hours despite knowing that these employees were not going to be part of Circles’ future plans, the person added.

The layoffs started all of a sudden in November 2019. “Before Diwali, there was a performance review, which was weird because we had one a few months back,” said the former employee. “They gave us more work during the process; we thought it was performance evaluation, but in fact, it was just extra work.”

A list of people were fired, purportedly over performance, the source said. While three employees still work out of Bengaluru, it’s all a charade to show that the centre is not completely shut, the former employee claimed.

Even in Singapore, its best performing market, employees were not spared.

While the company was on its expansion spree, Circles had also entered new sectors in Singapore, eventually getting trapped in its own concentric circles.

It launched its event discovery platform, Discover, in November 2018. The platform was the MVNO’s digital shot at moving beyond telephony, with artificial intelligence learning a user’s preference and recommending events they would be interested in. The plan was to eventually offer tickets that could be purchased directly on the app.

Rewards programme

The MVNO was also attempting credit and a rewards programme—Rides for Rewards, which was linked to the commuter payment system, EZ-Link. The programme offered points for every ride taken which could then be redeemed for rewards. Circles was also looking into building an e-wallet and issuing its own card for use, the person noted.


Applications of Rest Framework with PHP/HTML Web Service in comparison with an android conversational app

Competition has now gotten stiffer with TPG Telecom launching its postpaid plans on 31 March. Subscribers can get 50GB of data for S$10 (US$6.99) a month, pushing the notion of cheap data and a price war even further.

In all this, the Circles-M1 tie-up, stuck at no. 3, is doing little to change the Singapore telco landscape. In fact, M1 has taken on another MVNO, Geenet Mobile, on its network after holding off for four years.

Going round in Circles

Singapore wasn’t the only market Circles wanted to capture though. And in that ambition, Circles went further than it could afford to.

Circles raised an undisclosed Series C funding round in February 2019, led by venture capital firm Sequoia India. Armed with these funds, the company was ready to make big investments. More than $50 million for each new market launch, as well as $25 million into Circles-X, its proprietary software platform. It went to Taiwan and Australia, with the promise of three more markets in the future. It is currently preparing to launch services in Indonesia.

The MVNO also put S$25 million down for the Bengaluru centre.

Taiwan and Australia are local moves. The combined market—with 29.3 million and 28.3 million mobile phone subscribers, respectively, as of 2018—dwarfs Singapore’s 8.6 million, whilst retaining similar consumer dynamics.

“ has carefully chosen these markets where individuals are more comfortable transacting online and rely on digital means more than the physical means,” said IDC’s Batra. “It falls in line with [its] strategy to have a lean footprint and operational costs by not having stores, etc.”

Taiwan looked like a smart choice—Circles claimed in a press release that over 84% of Taiwanese are online shoppers and 64% of them prefer to shop on their mobile devices. Over 80% of Circles’ users signed up via the MVNO’s website at launch and, publicly, it looked like a success.

However, behind the scenes, Circles was hamstrung by its partner in the region, Chunghwa Telecom, and had little leeway with regulations, according to the previously mentioned person. “It couldn’t do promos, or price changes, basically couldn’t do anything. For Taiwan, it underestimated the customer’s behaviour and the partner,” the person added.

Circles offered the same old promos and features in Taiwan as it had in Singapore—cheaper data, no lock-ins—but it was no first-mover in the region. Line Mobile and Ibon Mobile were already established players in Taiwan.

Eventually, the axe fell on its near-50-strong Taiwan team. While reports of layoffs only came out in February 2020, the same person quoted above revealed they’d started in September 2019. First, the operations and customer service people were let go, a second batch was fired just a month later, and a third batch was laid off in February. Even the general manager of Circles’ Taiwan operations wasn’t spared, with a replacement hired soon after.

In Australia, it was a problem of plenty—this is a market with 22 other MVNOs. And when the promos stopped, customers left as well, said the person. “They didn’t have anything unique to offer.”


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The MVNO has also been consistently loss-making since its inception. According to company filings, between May-Dec 2017, Circles reported a loss of S$5.6 million (US$3.91 million), which widened to S$8.6 million (US$6.1 million) for the year ended Dec 2018. These heavy losses come despite revenues of S$68.5 million (US$47.9 million) for 2018 and S$31.9 million (US$22.3 million) for 2017.

Circles did not report its financials for 2019 at the time of publishing. It also declined to participate in this story.

It’s the worst time to be flailing. There’s competition rising all over—more MVNOs are in the market, while incumbent telcos are employing new tactics like cheaper data, data rollovers and no lock-ins. From changing the rules of the game, Circles is now playing catch up. While marketing has been the company’s strong suit, its out-of-the-box marketing stunts can only take it so far.

Once positioned to upend the telco market, Singapore’s biggest MVNO is now performing a high-wire act.

Old tricks, new game

Singapore is an outlier in the Southeast Asian region, with mobile penetration above 100%. This makes it a potentially lucrative market for mobile operators. In fact, new telco entrant TPG Telecom wanted to use Singapore as a testbed for its Australian operations, as we previously reported.

Circles’ ploy for a Singapore takeover was simple. Cheap data.

The first plan launched by Circles gave customers 3GB of data for S$28 (US$19.57) a month. In comparison, Singtel was offering 3GB for S$62.90 (US$43.96) a month back in 2016.

Soon enough, almost all incumbents started offering more data as an add-on to current plans. For instance, Singtel offered subscribers twice their current free data allocation for an extra S$5.90 (US$4.12) a month.

Handset subsidies

Before long, telcos were eschewing one of their biggest customer draws—handset subsidies to offer SIM-only plans. Handset subsidies come with a 12-month or 24-month contract for a cheaper upfront cost for a smartphone. Termination of the contract early would result in financial penalties, incentivising subscribers to renew contracts for newer phones.

Things got worse as features that Circles introduced in 2016 became standard across the telco industry. Prices plummeted as telcos raced to match each other’s SIM-only plans and features.

In June 2019, the scales tipped. Telcos announced monthly excess data rollover and, suddenly, Circles found itself following suit, instead of leading from the front.

Circles’ troubles come at a time when it’s surrounded by MVNOs in Singapore. Nine—Zero1, RedOne, VivoBee, MyRepublic, GridMobile, ViviFi, Geenet Mobile, CMLink SG—excluding the now-defunct Zero SG, which lasted all of two years.

A person familiar with Circles noted that it had an easy model to copy. As telcos got involved, it became a price war. “Circles’ unique sales proposition was giving power back to the customers, which, customers say, is true,” said the person. This meant understanding customer demand and delivering. For instance, Circles had a WhatsApp and instant messaging add-on to its data pack. This meant customers could use WhatsApp without exhausting their data.

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Since Covid-19 is a new disease, Digit didn’t have past data on its severity and escalation. So, the insurer studied other infectious diseases like SARS and looked at how it had panned out in the affected nations, added Chaturvedi.

As a fixed-benefit product under the sandbox regulations, the liability of Digit’s policy was predetermined. IRDAI sets limits on the sales of a product under the sandbox: sell for either six months, or till you sell 10,000 policies, or sell upto Rs 50 lakh.

“We hit the Rs 50 lakh limit in about three weeks, so we had to stop it,” said Chaturvedi. “We are now looking at the data to see if we want to launch a retail product [outside the sandbox].”

Digit’s Covid-19 policy was the only retail product in the market for three weeks. Most companies have only launched group policies with fixed benefits to limit their risk. A retail insurance policy is bought by individuals, while a group policy is typically offered by companies to its employees as a health benefit. Retail insurance is more robust than group insurance, as the retail policies come up for regular renewals and are not subject to as much pricing pressure as group policies.

“We are seeing how the disease progresses before launching retail products,” said Sanjay Datta, chief underwriting officer at ICICI Lombard. The insurer has launched a plan where it sells Covid-specific cover through companies like e- commerce retailer Flipkart. “We are planning to limit the number of policies sold. These are hard to get right,” Datta added.

Like Digit, other companies have also studied the epidemiology of diseases similar to Covid-19, such as SARS and H1N1, to come up with pricing for their policies. But these diseases were far more contained than Covid-19, making this pandemic particularly hard to price.

Ayushman Bharat

The Indian government’s scheme, which gives free health insurance to 500 million people, is going to add to the burden. The government usually pays the premium to private insurers. “We are anticipating an increase in the volume of claims from this route too,” said an executive at HDFC Ergo.

Uncalculated risk

Star Health’s Dr Prakash says the incidence of Covid-19 is higher than any respiratory-related illness. To remove uncertainties, insurers have gone the fixed-benefit route. They pay a fixed lump sum on detection of Covid-19 rather than covering the cost of treatment. But there’s a big risk here: if the incidence rate is miscalculated, insurance companies may face a massive number of claims.

“Covid-19 covers are a bad idea for insurers unless they have a definite strategy of quick scaling and also upselling their base plan,” said Jayan Mathews, co-founder of Vital, a platform for health insurance and financing. He was the former product head at Apollo Munich Health Insurance, before it was acquired by HDFC Ergo in January. “If they don’t get the adequate numbers quickly or ensure they have the correct risk premium, they won’t have a diversified enough portfolio to bear the concentration of risk.”

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Insurers are hoping that the Indian government sets a cap on the Covid-19 treatment cost like it did with testing. If that doesn’t happen, insurers are in for a wild ride. But even in the absence of such an assurance, some insurers have already taken the plunge by launching Covid-specific covers. What gives?

The disease-cover route

The biggest problem for India’s insurance sector is people’s fatalistic belief that it won’t happen to them. Not many want to spend on a premium of Rs 10,000 a year for something they don’t consider likely. And even many of those who buy a policy look at it as a tax-saving instrument.

Employers, too, purchase coverage for their workers—usually group policies—but these cover expenses of only around Rs 1-3 lakh ($1,312.7 – $3,938.3)—a sum that would only partially cover a major hospitalisation.

Instead, insurers find it easier to nudge people into buying insurance via disease-based coverage. Like a dengue-specific policy if monsoons are severe where you live; a diabetes or cancer care insurance if you are genetically predisposed to it. In general, critical illness policies that cover for cancer sell more than infectious disease policies, said Dr Prakash. People also tend to renew critical illness-based covers more than a dengue cover.

Yearly premiums for such policies are less than Rs 1,000 ($13.13), while offering significant coverage. Moreover, a diabetic person wouldn’t be allowed to buy a general health insurance policy even if they wanted one. But that’s not the case with disease-based covers, which can be bought even by people who are already suffering from a disease.

For insurers, disease-based covers are, in theory, good products to sell as their loss ratios are lesser than those of general health insurance plans. This makes them a favourable proposition for insurers.

However, they are still not profit-making products, according to the senior executive quoted earlier. For starters, they only really sell online, and usually as add-on products. Insurance agents, after all, earn commissions on policies sold, so low-ticket products aren’t something they care to flog. The problem with selling digitally, though, is that most insurers say they don’t have the budget for digital marketing. As a result, insurers generally view these policies as a way to get a foot in the door to upsell general health insurance coverage.

Disrupting the film and TV movie market with premium service at affordable price

Take Digit, for example. Its Covid-19 policy is a way of promoting its recently launched health insurance product. Call it foresight or just plain luck, Digit had filed for need-based insurance for health under the IRDAI’s sandbox regulations and had received an approval in January 2020.

“While we were contemplating the best manner to project this sandbox application, we witnessed the rapid increase of this disease in India,” said Vivek Chaturvedi, head of marketing at Digit. “We finalised on the modalities and documents, and it took us about two weeks to launch the policy. All we had to do was change the variables [like frequency and severity of the disease] in our database and we had a new product.”

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While Covid-19 is being treated for free in government hospitals, as the number of cases rise, private hospitals will increasingly come into play. “We expect hospitals to see a 100-120% utilisation of capacity,” said Dr Prakash. On average, mature hospital chains like Apollo and Fortis see 60%-70% occupation.

But with no standard operating procedure or price for treatment of Covid-19 in private hospitals, the disease is also shining the light on the health insurance sector’s vulnerabilities.

Insurance’s Achilles heel

Insurance’s Achilles heel

Insurance is a pool of risk. On a good day, less than 10% of policyholders claim the majority of the premium. But if the claim amount or the number of people making claims changes, it spells trouble. With Covid-19, it’s both. As it is, insurance companies work on very thin margins, so the sector usually is not able to absorb too much of a shock.

“When we have a bad monsoon and the claims increase by two percentage points, that wipes out a third of our profits,” said a senior executive at HDFC Ergo Health Insurance. Insurers generally see a spike in claims during the monsoon season because of a rise in cases of dengue, malaria, and cholera.

Another important source of income for insurers is investments. But insurers are restricted when it comes to what they can invest in. “We are not allowed to invest in risky assets, only in bonds, and that is also going down now (due to the economy). So we are in the worst possible place,” the senior executive explains.

Covid-19 is also bringing a long-standing problem to the fore—India’s healthcare prices are not regulated, but insurance prices are. As a result, Covid-19 treatment prices in hospitals range from Rs 70,000 ($918.9) to Rs 7 lakh ($9,189.2). The severity of cases also varies. About 80% of Covid-19 cases are mild and need about five days of hospitalisation, while 15% are moderate, and 5% severe.

“This makes it very hard for us to price our policies,” said Dr Prakash of Star Health. “That is why we have been urging hospitals to adopt a standard operating rate.”

Hospitals charge like hotels, said a senior executive from HDFC Ergo. “A hotel can charge Rs 25,000 ($328.2) or Rs 10,000 ($131.3). Nothing stops them. But the amount of profit we can make is linked to the hospitals’ pricing. So if there is a wide variance in price, our loss ratio can go wonky.”

Pernicious burden

Of the 100 claims Star Health saw, 14 are confirmed and the rest are suspected cases. Dr Prakash is worried about the suspected cases as they can add to the burden of people rushing to hospitals, undergoing treatment on suspicion and claiming insurance. ‘This population is nearly six-fold and we get all that additional volume. It is a pernicious burden,’ he said

IRDAI keeps a close eye on insurers’ loss ratios and takes action if it crosses a threshold. “If the loss ratios fall below 60%, IRDAI asks us to change the price as it feels insurers are making too much of a profit on a policy,” added the executive. HDFC Ergo has not launched a Covid-19 policy yet.

Climbing its way back to success

Go-Studio was also hampered by the commercial failure of a high-profile production called Foxtrot 6—an action film set in the future, featuring some of Indonesia’s best-known actors.

“The Foxtrot film was invested in heavily and it didn’t pan out,” said a former Gojek employee who requested anonymity. “It didn’t bring the returns they were supposed to.”

The controversial film projects coincided with internal disagreements at Gojek about the structure and alignment of its entertainment arm. The original leadership of Go-Studio was eventually replaced and reorganised as GoPlay Originals. Go-Live, a division that was meant to stage live events such as e-sports competitions and concerts, was disbanded.

Building an ecosystem

Building an ecosystem

Gojek’s interest in content and entertainment grew after the 2017 acquisition of Indonesian online ticketing startup Loket, according to a former employee of GoEntertainment, which is Gojek’s umbrella unit for content and events. Founded in 2013 by serial tech entrepreneur Edy Sulistyo, Loket was built for event organisers to handle ticket distribution and payments for concerts and sports tournaments.

The tech Loket had was good, and the company was an expert at implementing it on a mass scale. Loket got the chance to prove this during the 2018 Asian Games in Jakarta. Ticket sales had been chaotic, with some events playing out in front of half-empty stadiums, even though distributors claimed they had sold out. When ticket sales were moved to Loket, the situation improved.

What Loket lacked was business experience, the former GoEntertainment employee said, which is why the Gojek takeover made sense. Gojek wanted to integrate Loket’s ticketing expertise with its app, where it already offered ticket sales through its GoTix feature, and its wallet GoPay. Gojek users could now use GoPay to not just pay for their rides and food deliveries, but also to purchase tickets for events and movies.

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Gojek’s ambitions continued to grow. Instead of supporting others’ films and events, Gojek realised it could make its own movies to distribute through its channel. The driving force behind this line of thought was to extend the use cases for GoPay, another former employee said.

In Indonesia, only 2% of the 260 million people have credit cards, which means mobile wallets are usually pre-loaded with credit. Gojek made this easy by letting people use their drivers as pay-in points: you’d give them cash, and they’d top up the desired amount in your GoPay wallet.

Now, Gojek wanted to introduce more ways for users to spend GoPay credits. Buying event tickets was obvious, but paying for content seemed like an achievable next step. Gojek equipped its new Go-Studio and Go-Live divisions’ team leaders with a bold vision and the promise of funds to get there.

There was talk of a “US$80 million-90 million budget” for the entertainment group, one former employee said. Gojek wanted to get into live events, such as e-sports and pop concerts. The film division was supposed to get US$50 million, but that sum was then chopped down to US$4 million, said another former employee.

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GoPlay also offers its content in a bundle with vouchers for GoFood, the food delivery service of Gojek. For IDR 99,000 (US$6.09), you get a one-month subscription of GoPlay and IDR 240,000-worth (US$14.76) of food vouchers. This means, if you’re a regular food delivery user, Gojek subsidises you with IDR 141,000 (US$8.67) to try out its video app. That’s worth five caffe lattes at Starbucks.

Launched in 2015, Gojek first made plans to get into the content creation and distribution business public in May 2018. It raised more than US$2 billion that year and became Indonesia’s highest-valued tech company, scratching the $10 billion mark.

Cancelled commitments

With its charismatic founder and CEO Nadiem Makarim still at the helm, Gojek wanted to inhabit all corners of Indonesians’ digital lives. Instead of merely forming the layer through which people ordered services or bought food, Gojek thought: why not get into concerts, sports events, and movies, and distribute them through its own channels?

But amidst this feverish pursuit, some projects floundered and struggled to find direction. GoPlay is one of them.

Some of those involved with GoPlay, either as former employees or partners, said that giving the outward impression of a growing content business in addition to Gojek’s other services helped with fundraising and justified skyrocketing valuations. However, they added that there wasn’t a full buy-in internally, at the shareholder level. Makarim has since left the firm and now serves as Indonesia’s Minister of Education and Culture.

The chaos left some filmmakers whom Gojek had agreed to support stranded. They had already begun working on projects and had even spent from their own pockets to get things started.

It’s a drama that will never make it into the GoPlay content library, but one that shows business processes can be messy, even at one of the brightest and best-equipped tech companies in the country.

The first cracks in Gojek’s newfound interest in film and entertainment began to show in the second half of 2018.

At a press conference in Jakarta in July that year, several smiling faces beamed down from a stage. There were Gojek representatives, and people from Indonesia’s documentary film scene. The creative economy agency, a government body, was also present.

Press conference to announce the Docs By The Sea Co-Production Fund in July 2018. Image: Indonesia’s Creative

Economy Agency (Bekraf)

The event marked the launch of the “Docs By The Sea Co-Production Fund”. Under this initiative, Gojek’s newly formed film production unit, Go-Studio, would co-finance 12 Indonesian documentary projects and mentor filmmakers. The aim was to obtain global distribution for these documentaries. In August, the films selected for this scheme were announced at an event in Bali.

However, Gojek pulled out of its commitment about three months after the announcement, according to Amelia Hapsari, head of Docs By The Sea. “I was told that Gojek was going through a massive restructuring,” she said. Gojek told her that the people spearheading the fund didn’t have an actual authorisation from the company to do so. Hence, their commitments weren’t valid.

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“The Act provides regulatory certainty to industry players,” said Luno’s Goh. “More importantly, it gives consumers a clear sense of the players they can trust, ensuring they are in a position to make informed choices of the companies who will safeguard their funds.”

A necessary move

A necessary move

Lawyers that we spoke to believe the PSA was a necessary regulation. Not only did it plug loopholes in the old Money-Changing and Remittance Businesses Act 1979, which did not govern e-wallets and cryptocurrency exchanges, but it brings the law into this century, by addressing the entire chain of electronic payments.

“The [new] Act has been positioned in trying to update the legislation and to bring it under one roof,” said Pinsent’s Tan.

London-based fintech company Revolut sees the PSA as encouraging innovation and growth of e-payments services in Singapore. “Revolut views the Act as timely as it provides regulatory certainty over a number of different activities,” said Eddie Lee, regional director of operations, Asia Pacific, Revolut. “At the same time, it strengthens consumer protection and promotes confidence in the use of e-payments.”

E-payments Services Act’s major changes

E-payments companies can be licensed as a major or standard payment institution
Transaction limits
Fintech companies can only store S$5,000 in a wallet at any time. There’s also a S$30,000 annual transaction limit
ATM withdrawals
Fintech companies cannot allow customers to withdraw money directly from their account via ATMs
Cryptocurrency exchanges have now gained a semblance of legitimacy by being licensed under the Act. Before the PSA, cryptocurrency exchanges walked a fine line, as the Monetary Authority of Singapore kept a close eye to ensure that digital tokens did not constitute securities. These exchanges worked with no real formal regulation on operating their business in Singapore.

The clarity of the PSA has been lauded by many, with transparency being the key that will help these licensed startups attract investors, according to Stefanie Yuen Thio, joint managing director, TSMP Law Corporation. “Third parties also have the benefit of knowing that the ecosystem has rigorous regulatory oversight,” she said.

Singapore is one of the latecomers to the licensing game in the fintech sector. In Malaysia and Thailand, e-payments startups and cryptocurrency exchanges have been licensed since 2019. The Philippines has regulated e-wallets since 2009 and crypto exchanges since 2017.

Lucky winners

It’s easy to see that crypto startups are one of the biggest beneficiaries of the PSA. Being licensed will not only bring them legitimacy, but also allow them to open and maintain bank accounts in Singapore. In 2017, Singapore banks closed the accounts of several cryptocurrency and payments services companies, without providing a reason. “Being regulated under PSA, banks should not be able to refuse you an account,” said Golden Gate Ventures’ Drijkoningen.

Luno’s Goh believes the PSA is the herald for more countries to make such frameworks if it still doesn’t exist, or refine them if they do. Ultimately this will lead to a boost in customer trust and confidence in licensed operators. Luno’s credibility propelled after it attained a licence in Malaysia, not just with partners and customers in the country but in other Southeast Asian markets as well.