A day after issuing an additional four virtual banking licenses, the Hong Kong Market Authority (HKMA) announced on Friday that it has given the green light to two firms offering ‘stored value facilities.’
Launched in 2016, the HKMA’s stored value licenses aim to regulate the market for prepaid cash storage services. Though there are some other solutions that firms operating in this market can offer, most of them provide prepaid card services.
Challenger banks in the UK, such as Monzo and Revolut, all started out offering such services, before eventually receiving banking licenses.
HKMA at the forefront in Asia
It is unclear as to exactly what the two companies that received regulatory approval from the HKMA on Friday, Yintran and Geoswift, are going to do with their licenses.
Geoswift is probably going to be offering prepaid card services. The Hong Kong firm, which mainly offers payment clearing services, already has a section on its website dedicated to virtual accounts and prepaid cards.
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Yintran offers a similar set of services to Geoswift, with a focus on money transfers. Access to the company’s application and website is restricted to users, so it is unclear as to whether or not the firm also lists a set of prepaid card products.
“The SVF industry has been growing since the implementation of the SVF licensing regime in 2016,” said Howard Lee, deputy chief executive of the HKMA. “We hope the existing as well as the new licensees will continue to launch new services to bring more convenience and choices to consumers and merchants, and to promote diversity in the payment ecosystem of Hong Kong.”
Hong Kong has been one of the most forward-looking jurisdictions in Asia when it comes to digital banking.
Though payments solutions, such as WeChat, have been widely embraced by people in East Asia, most regulators have not put in place rules that would allow firms providing those solutions to upgrade into banking services, as Monzo and other challenger banks have done in Europe.
Hong Kong has done that and we are starting to see a host of digital-only banks emerge at the end of the HKMA’s regulatory application process.