SINGAPORE'S latest move to open up its instant, round-the-clock payment rails to fintech firms can reduce the odds of downtime, which fintech firms claim to be a result of being wholly reliant on the traditional banking network.
But the devil is in the details - ensuring that the latest policy change will remove the friction in payment settlement and technology build that would otherwise raise costs for startups, even as they race down fees against the big boys.
This observation comes off the first-hand experience of remittance unicorn TransferWise, which began running on the Bank of England's payment rails directly earlier this year.
The startup's head of banking Lukas May told The Business Times: "TransferWise was first through the door. We think it's the way forward. There is a recognition that it is an outdated view of the world that banks are the only ones who can do (payments)."
At this point, however, TransferWise will not have a settlement account with the Monetary Authority of Singapore, unlike for its current arrangement with the Bank of England.
Instead, TransferWise would likely have to pay for a settlement account offered by its banking partner, in the same way that it did for some time in the UK until the regulator felt comfortable with handing over a direct settlement account to the startup, said Mr May.
Paying for a settlement account can add to overall costs of servicing customers.
TransferWise has said transfer time across its network differs across countries. Transfers are not done round the clock; they are held back during the scheduled-maintenance hours by the banks.
It is also no surprise that TransferWise - started after the founders felt consumers were being ripped off on high forex charges on remittances - is sensitive to the hidden charges that exist in payment infrastructure. Its calling card is in reducing fees for customers as it scales; already, it has lowered prices 30 times in the last nine months for its customers globally.
Late last year, its Singapore office published an independent research paper that noted that on average, Singapore banks charge S$30 to S$40 in upfront fees and impose exchange rate markups for an overseas transfer of S$1,000.
Sending S$1,000 to the UK through TransferWise costs just about S$6.
This comes as regulators around the world are collectively warming up to the idea of opening the payments market to non-banking firms, seeing this as a competitive advantage in building financial infrastructure to spur growth.
Indeed, Hong Kong launched its version of Singapore's payment rail FAST - calling theirs the Faster Payment System - on the same day Singapore announced the opening up of the payment rails to fintech firms.
Mr May noted that Hong Kong's system - an open, cloud-based platform - is built such that non-banks can already connect. This flings the door open to large fintech players such as Alibaba and Tencent.
TransferWise will also link up to Hong Kong's platform, having expanded to Hong Kong recently.
With that, Mr May said, Singapore needs to ensure that the latest connecting platform needs to be cloud-based as well, given that the costs of hardware can easily set a fintech firm back by about S$1 million.
But aside from regulatory uncertainty on this front, TransferWise has gained from Singapore's quick moves in areas such as online verification.
TransferWise said this week that it would link up with data registry MyInfo, paving the way for one-click processing for its Singaporean customers via SingPass and creating a "world-beating" verification process. "This is a real testament to Singapore making things happen," said Mr May.
He added that regulators in parts of Malaysia and Thailand are taking cues from Singapore's playbook.
Amid this, TransferWise has gone round to assure regulators of the rigour of its checks against "dirty money", said Mr May. He declined to disclose how the company's anti-money-laundering detection system works.
TransferWise offers international transactions based on the real, mid-market exchange rate, and can do so at lower rates, as it has in effect created its own payment network through local banks in various parts of the world, circumventing the current payment system used by banks, known as Swift.
This means that, in practice, a Singapore customer travelling to Hong Kong can move money into TransferWise's Singapore account - held by DBS - at no charge, and get the equivalent in Hong Kong dollars via TransferWise's Hong Kong bank account quickly and for a small fee. TransferWise now offers some 1,300 currency routes.
The startup, which counts Singapore as its Asia headquarters and celebrated its first anniversary in the city-state last month, now moves about S$1.7 billion in and out of Singapore annually.
It now has 76 employees in Singapore, and expects to grow this number to 100 by year-end.
For the startup, which recently turned a profit globally, the need for volume to build a sustainable business is clear. While growth in Asia has been quicker than the doubling in payments globally, the market share here is far from its 15 per cent in the UK, said Mr May, who is based in Singapore. At the moment, TransferWise defines "active users" as those who make just one transfer in 12 months. He declined to reveal the startup's customer-acquisition costs.
It is raising the competition in Asia further with its early-2019 plans to launch in Singapore a debit card that is tied to a multi-currency account - a product already found in Europe.
Several Singapore and regional banks have already launched multi-currency products in the last couple of years, giving them a slight headstart over TransferWise.
Asked about the trend of multi-currency products, Mr May called them "cool", but said banks are still not disclosing the full costs of the transactions. "I still wish they (the banks) would prioritise transparency."