Standard Chartered Bank has begun to roll out the ability for people who travel abroad to pay for things via a direct connection to their domestic bank account.
The bank is working with Shanghai-based fintech Allinpay Merchant Services (Singapore) to stitch together the means for a Singaporean person to pay merchants via a QR code and have the payment debited from their Singaporean bank – regardless of whether or not their bank is Standard Chartered.
Allinpay Merchant Services is the Singapore arm of Allinpay International Group in Hong Kong, itself a unit of Shanghai-based Allinpay Network Services.
“This is a new B2C solution,” said Ankur Kanwar, head of cash products for Singapore and ASEAN at StanChart. “It took us a year to build it, but we’re launching in time for Hong Kong’s opening up to travel.”
That build required three pieces, or “engines”: for foreign exchange, for QR collections, and for payments.
Hello Hong Kong
The first use case for the StanChart-Allinpay service is for Singaporeans traveling to Hong Kong. If a Hong Kong merchant is part of the Allinpay network, Singaporeans can pay via a QR code that links to PayNow, Singapore’s domestic faster-payments system, and their bank account at home will be immediately debited.
The next phase is for Standard Chartered and Allinpay to enable the reverse: for Hongkongers visiting Singapore to directly debit their Hong Kong bank accounts when buying things in the Lion City, by using a QR code that connects to the Hong Kong Faster Payments System.
Eventually this scheme can be expanded to any other markets with domestic faster-payment systems, QR codes for payment, and a green light from local banking regulators.
The partnership has its limits, and is a response to a rapidly changing landscape for cross-border payments.
At the merchant-to-merchant level (or B2B), Standard Chartered is taking a different path. It is a shareholder in Partior, the Singapore-based blockchain-based platform for settling currency transactions. “That’s our cross-border B2B payments strategy,” Kanwar said, noting B2B transactions don’t involve QR codes, and are often sized beyond the transaction limits set by domestic faster-payment systems.
But the B2C space, involving people moving around and buying things in the stores of overseas merchants, has been more challenging.
Filling in the blanks
On the one hand, consumers have choices. Those with a credit card can use things like Apple Pay on their iPhones to make overseas purchases. Or they use a credit card, prepaid cards, or cash.
But they usually don’t have a means to use debit cards abroad. That means merchants must accept credit cards, which is expensive. Merchants bear those costs, typically 3 percent of a transaction.
If merchants in Hong Kong have the means to get a Singaporean to pay with a debit instrument instead of a credit card, they can keep that 3 percent (which is already baked into the price of whatever the merchant is selling).
There is still a charge related to debit but it’s much lower, as there is no credit risk. In the US, average debit card fees are about 0.6 percent, or about one-sixth the cost of processing a purchase by credit card.
That gives merchants an incentive to suggest customers might pay via debit using a QR code rather than by Apple Pay or credit card.
The limit is that those merchants must be in Allinpay’s network. The fintech says it has 30,000 “acceptance points” in Hong Kong. That’s about half of the 56,000-plus retail establishments operating as of 2023, according to the Hong Kong government’s Census and Statistics Department. Not bad, but not comprehensive.
StanChart’s tie-up with Allinpay also comes at a time when some regional governments are knitting together their domestic faster-payment systems. Singapore has done this with Thailand and India, so that the domestic real-time P2P payment rails can now interoperate.
This renders private solutions such as the StanChart-Allinpay partnership irrelevant. For the time being, however, such nationalized QR code solutions are rare, leaving banks and fintechs with plenty of scope to deliver alternatives.
For Standard Chartered, the partnership will give it a view into payment flows over Allinpay’s network. These merchants are customers of Allinpay, not necessarily of Standard Chartered, but the bank will gain some insight into their businesses, which gives its retail banking salespeople an edge in cross-selling or pitching products.
Secondly, the bank is straddling domestic payment rails. This service is available to all Singaporeans (and in reverse, will be available to all Hongkongers). This will give the bank some aggregate insights into trends and behavior. More tangibly, Allinpay flows settle through the bank, helping it grow its deposits.
Finally, the bank gets a cut of Allinpay’s revenues as a debit processor.
