MAS orders Qoo10 to cease payment services in Singapore

The Monetary Authority of Singapore (MAS) has ordered Singapore-based e-commerce platform Qoo10 to suspend its local payment services from September 23.

The decision was made after the authorities received several complaints from sellers against the platform between April and August this year regarding delays in payment processing.

The company has been asked to address the complaints. Some of them have been addressed, but others are still pending, MAS said in a press release on Monday (Sept. 23).

Earlier this month, Qoo10 informed MAS that a significant number of merchants would face payment delays.

The financial regulator then contacted the company’s management about the delays and offered it an opportunity to remedy the situation.

Qoo10 has also been asked to take steps to ensure that MAS will be able to meet its obligations to merchants on an ongoing basis, including using a third-party payment service provider to provide the covered services.

However, MAS found that to date, the company has not been able to sufficiently ensure that it has the resources and systems in place to meet its payment obligations to sellers in a timely manner, leading to the suspension.

The regulator said it had carefully considered the potential disruption the suspension could cause to the operation of the Qoo10 e-commerce platform or other services integrated with the covered payment services.

“(However), allowing Qoo10 to continue to provide insured payments services would expose more merchants… to the risk of greater unpaid liabilities and potential losses,” it said in a statement.

The company will be able to make payments to settle outstanding debts from these sellers, but cannot incur new payment obligations.

While the suspension will not prevent Qoo10 from operating its e-commerce platform, the company may need to use a third-party payment service provider to handle transactions on the platform, MAS said.

The suspension decision will be reviewed once the company is able to satisfy MAS that it is able to resolve the payment delays and protect the interests of its customers in Singapore on an ongoing basis, it added.

Two weeks ago, Strait Times announced that Qoo10 and its logistics subsidiary Qxpress are under police investigation. This comes after suppliers complained of late payments of thousands of dollars each and disruptions to deliveries by the subsidiary.

Singapore police officials told the newspaper on September 12 that reports had been filed against both parties and that investigations were ongoing.

The company is also struggling in South Korea.

In July, reports emerged that two South Korean e-commerce platforms owned by Qoo10 – Tmon and WeMakePrice – had failed to make payments to their suppliers.

Qoo10, which is backed by private equity firm KKR among others, believes the problem is caused by a glitch in its payments system.

Local financial authorities are said to have launched an investigation, with the government estimating the total amount of unpaid payments by the two Seoul-based platforms to be around 210 billion won (202.7 million Singapore dollars).

South Korean authorities announced they would provide low-interest loans to crisis-hit small businesses, as well as extend repayments on existing loans.