‘I don’t think there’s any effect’: Qoo10 suppliers waiting for payments call for further action after MAS move

ESCROW SERVICES

Payment delays have raised questions about escrow services operated by e-commerce platforms such as Qoo10.

An escrow service is a way to facilitate secure transactions by having a third party hold funds until certain obligations are met, such as receipt of an item.

E-commerce platforms often act as escrow agents for online purchases. If a transaction fails, the platform or escrow agent will facilitate the transfer of funds to the appropriate party.

“It protects the seller against non-payment by the buyer and protects the buyer against goods that are defective or not as advertised,” explained Professor Thompson Teo, a member of the Department of Analytics and Operations at the School of Business at the National University of Singapore.

“Escrow services also assist in mediation in the event of a transaction dispute.”

The disadvantage for sellers is that they must comply with the e-commerce platform’s terms and conditions, which may change over time, said Prof. Theo. Additional fees or payment delays may also occur.

Toh, a Qoo10 supplier who is about A$13,800 in debt, said he hopes to see more regulations for e-commerce platforms.

He pointed out, for example, that there is currently no rule specifying how long an e-commerce platform can withhold payments owed to sellers.

According to Toh, Qoo10 allowed his company to withdraw payments from sales on a weekly basis. However, the time his money was held in the escrow account later extended to weeks, then months.

“As a seller, we can’t do anything because that’s just what they say,” he added, raising concerns about what platforms could do with funds held in an escrow account.

“The transaction that passes through the platform every day is very large. It is numbered in millions,” he said.

“(W)e can do a lot with our funds one day… let alone in two months.”

SELLERS HOPE FOR MORE HELP

Explaining the decision to suspend payment services, MAS said on September 23 that allowing Qoo10 to continue operating would expose more merchants to the risk of larger outstanding liabilities and potential losses.

“Qoo10 will be able to make payments to satisfy the outstanding claims of such sellers, but will not be able to assume new payment obligations,” it said.

She added that Qoo10 may require the involvement of a third-party payment service provider to complete transactions on the platform.

“MAS will review the suspension once Qoo10 is able to satisfy MAS of its ability to resolve payment delays and protect the interests of its customers in Singapore on an ongoing basis,” it said.

But some suppliers hope that in addition to preventing further losses, authorities can do more to help affected suppliers get their money back.

Liu, who owes more than S$21,000, highlighted the situation in South Korea where two Qoo10 subsidiaries failed to pay their sellers. The government there stepped in to provide support such as low-interest loans to affected small businesses.

He hopes that similar measures or any form of assistance can also be offered to suppliers in Singapore.

Mr Dave, who sells electronics and office equipment on Qoo10, expressed frustration at the lack of clarity about the situation.

“There is no news from Qoo10… Nobody knows anything at the moment,” he said.

The platform owes him almost A$100,000 and more than 30 emails he has sent to the company have gone unanswered. This left him unsure whether he should continue to wait for the money or consider it a loss.

Hopefully, “someone who has certain authority will be able to actually intervene on everyone’s behalf so that everyone knows what to expect,” Dave said.

“We can really move on from here.”