Some time ago, I published a piece sharing my opinion on why I believe blockchain is already way past just being a fad. In that piece, I spoke about how every successful business needs a sturdy financial infrastructure, and that cryptocurrencies are the sustainable model or infrastructure that would support blockchain technology’s success.
Today, I’m going to focus on a Singapore-based organisation that is knee-deep in the making cryptocurrency payments a viable and real option in our near future. If you’re in Singapore and have dabbled in cryptocurrencies, you will have definitely heard of Xfers.
What does Xfers do?
First off, Xfers is a payment processor like Paypal and what they initially started out doing was to process bank transfer payments real-time. One of the key problems they were trying to solve is the time-consuming and messy process (when scaled up) of receiving payments via internet banking transfers for small businesses like blogshops.
Let’s look at an example: Imagine you’re selling bow ties, and 4 customers made payments for 1 bow tie each which costs $12 at around the same time on the same day, but you have received 5 orders, and you have no way to tell which customer has completed the payment. Imagine that situation at a much larger scale.
Xfers works with banks and has created a solution such that the merchant/seller can reconcile a bank transfer with a specific customer order via a unique user number per order. Beyond facilitating online payments, Xfers is also a leader when it comes to facilitating the purchase of cryptocurrencies with fiat currencies in Singapore.
However, banks have been reluctant to engage with cryptocurrencies thus far, primarily due to regulatory concerns (in particular money laundering risks). Nonetheless, Xfers is continuously working to improve the state of regulation of cryptocurrencies and is developing a temporary solution that works with legacy systems in the banks.
If you take a step back and study what Xfers is trying to do, it is actually looking to be the lowest denomination for payments that connects various payment methods together. They are poised to be a fintech payment partner for fintech companies, and aims to compete with the likes of giants like eNETS and Paypal.
Behind the Scenes @ Xfers
I managed to spend some quality time with a couple of the folks (Chris and Dave) from the Xfers team to find out more about what they do and asked them some questions to find out more about what goes on behind the scenes.
What are some of Xfers’ biggest hurdles since the surge of users in December 2017?
First off, we would like to thank our newer users for their patience and understanding for the delays in their user verification process back in Dec 2017.
We were caught off guard by the bull run in December 2017 and customer support was not able to support the large influx of users as effectively as we would like. User flow wasn’t optimised for scale due to the complexity of regulatory requirement such as the KYC process, and this naturally increased the customer support load, resulting in a slower turnaround for customer support. While we were happy that user signup rate has increased by more than 10 times, we were unable to process user verifications requests in a timely manner due to the manual process behind verifying identification documents and such. This caused a lot of new users to be frustrated at the long waiting time to complete verification, hence increasing customer support loads resulting in a bottleneck situation on our customer support resources. We tried our best to explain to the users our challenges as a payment processor, even though we are in the Fintech space, there are unfortunately still regulatory requirements that require manual processes, i.e. You can’t rely on AI to verify identification documents. We also partner with Thomson Reuters to filter out terrorists, politically exposed persons, fraudsters, known criminals, from using our platform. We want to continue to work with reputable agencies dedicated to security in this industry to help usher in the adoption of cryptocurrencies for payments.
Regarding your recent announcement regarding Coinbase, why the pause in your partnership?
Coinbase recently received an e-money license in the UK, which now enables the company to provide payment services and issue digital cash alternatives, which can then be used to make card, internet or phone payments in the UK. They now need to refocus and restructure to make their business more scalable. Support is something that’s a big hurdle, despite the fact that they hired a couple hundred more support staff.
As a result of this refocus, Coinbase has decided to temporarily pause partnership in a few geographical locations, including Singapore. However, as this is a massive spring-cleaning effort, Coinbase cannot commit to a date when they will resume the partnership with Xfers in Singapore.
Despite that, Xfers is still partnered with Coinhako, correct?
Yes, we have been serving both Coinbase and Coinhako since 2015. Working with Coinhako has its perks because they are locally-based in Singapore. We were able to better coordinate our efforts to provide a better user experience through streamlining the user KYC verification process. Xfers verified users will not have to sign up for a separate KYC/verification process with Coinhako when using their services, they can immediately start trading on Coinhako the moment their Xfers account is connected on Coinhako through an SMS OTP process
Xfers remains confident to support Coinhako in Singapore as Coinhako is the first Singapore-based cryptocurrency trading platform with good practices to be compliant with local regulatory requirements. We are happy to also announce that Xfers will be supporting Coinhako in their expansion to Jakarta too.
Do you have any entertaining situations you have encountered in the line of customer support to share with us?
Well, there are some interesting cases to note. Happy to share a few here:
A particular user made 6 mistakes in 5 top-up requests, and suggested, “since I have made so many mistakes, can you just increase my daily limit so I can top-up all at one go? This would reduce the number of mistakes I make.”. He wasn’t wrong on that account, but still a hard no from us.
We recently cracked an “almost criminal” case from a very creative, but under-informed, user. We found that there was a user with 2 accounts, operating under the guise of someone else. Upon further investigation, this user was operating an account which belonged to a family member. To cut a long story short, this suspected case of fraud and money laundering was actually a user who changed phones, didn’t know how to deactivate his 2FA authentication, and instead of contacting Xfers support for help, decided to create and control a second account using a family member’s particulars.
Another case of suspected fraud and money laundering. We caught a user with 2 account registered to him. Both accounts had identical transaction patterns. It turns out that there was no sinister plot or attempt at gaming the system, but a man who was trying to hide a part of his earnings from his family. We did have to close the second account of course.
Someone asked how long is 24 hours when we informed him that account limits are refreshed every 24 hours. We have to admit it was challenging to explain that part without further complications. Along these same lines, we occasionally have to explain what AM and PM are and have to teach adults how to tell the time.
We’re going to continue to focus on building a wider community instead of having well-informed users remain in echo chamber groups, so people can get together and share information collectively as a large, decentralised community. On top of sharing knowledge, the community also serves to legitimise facts and debunk scams and false information.
What else do you have planned in the near future to usher in crypto adoption in Singapore?
Firstly, further improving user experience is a top priority to really improve adoption rates. This would then translate to more real-time top-ups, higher top-up limits, higher withdrawal limits and account limits. Secondly, we want to explore adding new features like fintech services such as remittances, crowdfunding, and robo advisory further in the future to help users diversify their investments. Thirdly, we want to direct the community to adopt a self-learning and information-sharing attitude regarding to fintech. This can help all users become more educated with their money, and it may convert a few people who might be otherwise turned off to the idea of cryptocurrency.
It’s clear that unregulated environments are a breeding ground for crime, and this is a crucial stage of development where just 1 regulatory misstep / breach will send the entire crypto ecosystem crumbling down. Xfers is clearly walking down a road that facilitates greater adoption of cryptocurrencies, through complying with regulation and by ensuring that they work together as a community together with other crypto-friendly organisations (like ACCESS and CoinHako). In fact, Xfers has recently been commended by the Singapore Police Force for collaborating with them to block impersonation scams, it’s been published by The Straits Times, Today Online and The New Paper.
Sit tight, be patient as they work through the kinks, and let’s come together as a community and walk towards a safer and more secure blockchain-empowered future.