Yedpay! joins queue of hopefuls seeking a virtual bank licence in Hong Kong

The Payment Cards Group, also known as Yedpay!, is planning to apply for a virtual bank licence from the Hong Kong Monetary Authority to expand into the corporate banking business, according to a senior executive.

The company offers Hong Kong mobile or internet payments for 3,000 taxi drivers, 3,000 merchants in wet markets, as well as more than 2,000 small-and-medium-sized companies that accept payment via Alipay and UnionPay, according to its chief information security officer Alva Wong.

“We would like to be among the first batch of companies to apply for a virtual bank licence from the HKMA before the deadline on August 31. If successful, we can expand into a full range of corporate banking services for our merchants and SMEs such as cross border remittance and other transfers,” Wong said in an exclusive interview with the South China Morning Post on Monday.

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“If we can get the licence, we would also be able to explore opportunities to work with other virtual banks in overseas markets,” he said.

“Many start-ups, including my company, have difficulties in opening bank accounts with traditional banks. We hope the virtual banks can help these SMEs to enjoy banking services. We are not a direct competitor with traditional banks, but we could fill in the gaps for services they do not offer,” Wong said.

HKMA deputy chief executive Arthur Yuen last week announced guidelines for virtual banks in Hong Kong. Yuen set August 31 as the deadline for applicants who want to be among the first batch to be assessed for the licences to be issued by the end of this year.

Wong said his company now has obtained Payment Card Industry Data Security Standards (PCI DSS) Level 1 Certificate, which is the highest security level for e-commerce. The company also has a licence from the Customs and Excise Department Money Service Supervision Bureau of Hong Kong to conduct money exchange and payment services.

Alipay and WeChat Pay push digital payment services to taxis outside China

Under its business model, the company acts as a middleman between payment issuers and merchants. Taxi drivers, merchants and SMEs pay about 1.5 per cent of the value of a transaction to Yedpay! In return, the company works with Alipay or UnionPay for settlement.

“The benefit for Alipay or UnionPay to use Yedpay! as partner is that it saves them the trouble to connect with all the taxi drivers, merchants or SMEs,” Wong said.

The company, set up four years ago, has attracted investment from Harmony Asset Management. Vivian Yan, investment director of Harmony, said the company has invested in Yedpay! for its security platform.

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“Hong Kong lags behind in developing fintech. The HKMA virtual bank licence guideline is new and we need to understand more on how to comply with the guideline. We hope the virtual bank licence would help to add new players in the banking sector in Hong Kong to enhance competition,” she said.

Alipay is operated by Ant Financial Services Group, a unit of Alibaba Group Holding, which is also the owner of the South China Morning Post.