MAS orders eCommerce platform Qoo10 to cease payment services

The Monetary Authority of Singapore (MAS) has ordered eCommerce platform Qoo10 to suspend the provision of all payment services covered under the Payment Services Act 2019 (PS Act) in Singapore from 23 September 2024 onwards. 

When the PS Act was introduced, existing payment service providers were exempted and could continue these services pending the review of their licence applications by MAS. This is so that these services are not disrupted pending licensing.

Don't miss: Qoo10 under investigation over payment delays to vendors

Qoo10 is not licensed by MAS, but was exempted and could continue conducting payment services while its licence application is being reviewed, explained MAS in a statement. 

Between April and August 2024, MAS and other government agencies received several customer complaints against Qoo10 for delays in processing payments to these customers, who are merchants on Qoo10’s eCommerce platform.

Qoo10 was asked to address these complaints, and while some were resolved, others remained outstanding. In early September 2024, Qoo10 informed MAS that a significant number of merchants will face payment delays.

"MAS engaged with the management of Qoo10 about these delays and expressed our serious concerns," it said, adding that MAS provided opportunities to Qoo10 to remedy these concerns and required the company to take steps to satisfy MAS that it would be able to meet its obligations to merchants on an ongoing basis, including engaging a third-party payment service provider to offer the covered services.

It said:

To date, Qoo10 has been unable to provide sufficient assurance that it had the resources and systems to meet its payment obligations to merchants in a timely manner.

MAS has thus directed Qoo10 to suspend its covered payment services in Singapore from 23 September 2024.

MAS has had to carefully consider the potential disruption the suspension could cause to Qoo10’s eCommerce platform or other services that are integrated with the covered payments services, it said. 

However, permitting Qoo10 to continue providing covered payments services would expose more merchants using Qoo10’s covered payment services to risks of larger outstanding obligations and potential losses.

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

This suspension does not prohibit Qoo10 from operating its eCommerce platform, but it may need to engage a third-party payment service provider for transactions on this platform.

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.

Merchants facing payment delays should raise their concerns with Qoo10. If the concerns remain unresolved, there are established processes in place to assist merchants in resolving commercial disputes, inclusive of debt recovery, MAS said. 

What happened?

This comes after the police investigated Qoo10 over payment delays earlier this month. 

In a statement to CNA at the time, the Singapore Police Force said that reports were lodged against Qoo10 and that investigations are ongoing. 

Following the payment delays, several vendors have reportedly pulled its products from the platform. This includes big and small brands such as instant beverage retailer Gold Kili and bak kwa seller Fragrance, according to CNA.

In addition, some vendors have also reportedly sought help from the small claims tribunals of the State Courts. 

This comes as South Korea said that it will provide US$400 million in financial support to small businesses that were affected by payment delays from Qoo10's two eCommerce platforms, TMON and WeMakePrice earlier in August, according to Reuters. 

According to Reuters, payment delays have prompted South Korean financial authorities to launch an investigation with some vendors cutting ties with the platform and customers demanding refunds.

Missed payments by the eCommerce platforms have reportedly amounted to 210 billion won (US$152 million). 

Following which, deputy prime minister and minister for trade and industry Gan Kim Yong have said that the government has been closely monitoring developments in South Korea regarding Qoo10's subsidiaries. 

Gan added that the government is also in touch with Qoo10 to assess whether and how this may affect its operations in Singapore. 

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