KPay, a merchant acquiring fintech based in Hong Kong, has begun to expand regionally. Launched in 2020, it entered Singapore a year ago, and in 2024 added Japan.
It’s likely to add more Asian markets in 2025, says founder Richard Wong, co-founder and head of partnerships. The startup, bootstrapped with friends-and-family money, may also consider raising outside capital, if those investors can help it realize its international ambitions.
“We’d prefer to work with a global VC or private-equity firm,” he said.
But he says funding is not the immediate priority. The company is looking first to extend its regional footprint and obtain payments licenses. It is applying for one from the Monetary Authority of Singapore, for example.
Evolution into payments
The company aims to provide merchants with a full suite of payments-related services, including pay-outs, pay-ins, and treasury services. That’s a lot, so some of its product ideas are still at the blueprint stage. But after four years, the company says it has about 39,000 merchants in Hong Kong as users, along with another 10,000 in Singapore.
Wong’s focus on payments emerged after working at an earlier startup called ChargeSpot, which leased power banks for people to charge mobile phones at places like bars, movie theaters, or 7-11s. Wong acknowledges the business offering was just a ‘nice to have’ for merchants, not a necessity, but at the time he noticed merchants were overwhelmed with multiple point-of-sale systems and payment gateways.
Wong had also spent time in San Francisco, where he was impressed by fintechs such as Square which, along with its affiliated Cash App, provided a one-stop platform for merchant payments.
When Covid came, people stopped going to bars and the cinema, so he and his co-founders launched KPay.
“Merchants are eager to simplify,” he told DigFin.
Competitive edge
KPay’s operating in a crowded environment, competing against international players like Stripe and Payoneer, as well as strong local players such as Bindo in Hong Kong and Grab in Singapore.
Wong says KPay can compete because, first, it offers a unified suite for merchants, versus competitors that tend to lean on one side of transactions (payouts, for example). As for more complete offerings from a behemoth like Stripe, Wong says KPay is winning deals thanks to a team of salespeople that canvass shops.
“Square is our inspiration, because it has an end-to-end merchant solution,” Wong said. He acknowledges Stripe is the global leader for fintech payments, but they’re so big, they haven’t bothered with local merchant sales.
“They’re a key leader online, revamping the infrastructure of payments,” Wong said of Stripe. “They’re becoming like the J.P. Morgan of the industry. But they have minimal touchpoints with merchants.”
Diversified offering
KPay provides services in three core areas: pay-ins, payouts, and value-added services such as treasury features. However, not all of these are well developed yet.
For pay-ins, matters start with its orange-branded PoS machines. (It also offers a QR card for wet-market stalls and other low-income sellers.) This handles collections including those from overseas and online. Its app lets merchants set up a checkout page or messaging tools to communicate with customers. It’s not yet handling installment payments or buy-now, pay-later arrangements.
KPay works with 19 different payment types, from credit cards to various electronic wallets. It makes money as an acquirer, charging MDR, or merchant discount rate, much as a credit card network does. These rates can range from 1.5 percent for processing credit-card payments to 1.2 percent for e-wallets.
That’s expensive for merchants, so KPay has to justify this by making their lives simpler and enabling them to grow their topline revenues. It attempts to do this by offering a comprehensive suite of services.
For payouts, KPay partners with AirWallex or, in Hong Kong, sends money directly to mobile accounts via local fast-payment rails.
Wong’s inspiration for this is Toast, the US food-and-bev fintech that uses its PoS to serve over 120,000 restaurants; the company listed in 2021. But the US is easier to create a scaled solution, whereas Asian markets are all different, forcing KPay to build verticals. “How to combine services for a bubble-tea shop is not the same as for a fine-dining restaurant,” he said.
Open banking
It’s also experimenting with open-banking models, currently with DBS with talks ongoing with other banks. By winning merchant consent to share data with KPay, it opens to door to its treasury services, a platform called KConnect. This can run the gamut from accounting and bookkeeping, to managing rewards programs, to opening bank accounts.
Although KConnect is live, Wong says it’s been slow to gain traction via open-banking channels. KPay maintains API connectivity with DBS in Hong Kong. But the consent-management framework is a work in progress, with banks in Hong Kong still haggling among themselves over protocols and standards.
“Open banking is a core proposition that we want to see in each market,” Wong said. But that varies on local regulation, and local bank appetite. So far in Japan, there’s been no demand. He hopes it will get easier in Singapore once KPay wins a merchant aquiring license.
Wong argues that open APIs bring a valuable use to banks. “We want to solve merchant funding needs, and we have real-time data,” he said. “Banks are still relying on historical data” to price a loan.
His goal is to create a business model in which KPay’s real-time data on collections can give bankers insight into a business’s cashflow and health. He says digital banks like PAObank are already doing this, but established banks lack the architecture to replicate this; they could build it themselves, or partner with a fintech like KPay to make it happen. “We do have a big merchant portfolio,” he added.
Such an arrangement would also help KPay diversify its revenues, adding SaaS fees from banks onto its MDR charges from merchants.
Wong says it’s taken the business four years of quietly growing a merchant base to start thinking seriously about new business models. “It’s taken us a long time to build,” he said. “Now it’s time to innovate.”
