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How these S’poreans built a fintech startup that now leads the payments, crypto space in SEA

xfers founders

Xfers is founded by a group of friends — three computer engineers and one legal professional — Samson Leo, Tianwei Liu, Tianyao Liu and Victor Liew.

The seeds of Xfers were planted years ago back when Tianwei worked for a startup in California’s Silicon Valley as part of National University of Singapore (NUS)’s Overseas Colleges (NOC) programme.

Silicon Valley is dubbed the mecca of the tech industry, and it propelled “startup” to become a buzzword. People were constantly talking about startups or working on one with a couple of friends.

The startup culture was so infectious that Tianwei was motivated to build his own tech startup, and he understood that the basic building block of a business is that it needed to solve a pain point, or help fill an existing gap in the market.

Back then, Tianwei would help friends in Singapore to buy e-readers from the United States. As orders grew, he had a frustrating time collecting payments.

“He would have 20 orders of e-readers, but after laboriously going through his bank statements, he could only find 15 payments. Since it’s all for the same amount, he couldn’t easily tell who has paid and who hasn’t. This was during the time before FAST/PayNow banking transfer innovations, and he didn’t want to pay the surcharge to accept card payments,” shared Xfers co-founder Samson.

“This [problem] pushed him to code a tool that could collect and reconcile bank transfer payments, and soon, the prototype for Xfers was born.”

Xfers is one of Singapore’s first Y Combinator companies

Later on, when a friend of Tianwei who ran an online store in Singapore asked about automated bank transfer payment reconciliations, he realised that the Xfers prototype fits the bill.

This spurred Tianwei to rope in his Silicon Valley roommate, Victor, to help him build a better digital payments platform.

The two of them worked on this “garage project” part-time for a good part of 2014, with the eventual addition of fellow NUS graduates — Samson and Tianyao — as co-founders.

Samson is not new to the business world at all. Before he worked as a corporate lawyer at one of the “big 4” law firms in Singapore, he had started up his own education business, which grew to five tuition centres islandwide at its peak.

xfers y combinator
Tianwei Liu (left) and Victor Liew (right) / Image Credit: Xfers

In mid-2015, Xfers was accepted into the Y Combinator incubation programme, which prompted them to leave their jobs and focus on building the business full-time.

“Our vision is to create an accessible financial ecosystem in SEA supported by open APIs. The current payment landscape can be described as “walled gardens”,” Samson told Vulcan Post.

For example, if you’re a customer from Bank A and you want to open an account with Bank B, you’d need to go through a full Know Your Customer (KYC) process again — even if you did it with Bank A. He sees this as a common pain point.

There is no easy way for users to move from garden to garden with ease. So we aim to break down these walls and improve the experience for both consumers and merchants to make it seamless and convenient. To achieve this goal, we are building a ‘wall-less’ payments ecosystem that will unite SEA and drive financial access.

– Samson Leo, co-founder of Xfers

Gaining trust and credibility among consumers

As a fintech company, being in a regulated space poses high, upfront startup costs.

Samson refused to disclose specific funding details but shared that they needed to invest heavily in regulatory compliance and technology cybersecurity even before commencing full-scale operations.

Furthermore, when they first started out, many of their customers were apprehensive in putting their money in the Xfers wallet and entrusting them to help collect payments.

Some customers would candidly ask us, ‘what if you run away with our money?’ or ‘what if you startup closes down?’

– Samson Leo, co-founder of Xfers

Additionally, when Xfers gained traction, their customers began to be defrauded by scammers to transfer money into their Xfers wallet, or even to give them their user name and password so the scammer could access and empty out the victim’s Xfers wallet.

This prompted Xfers to engage their external stakeholders — law enforcement, regulators, banking partners and the likes — to help consumers understand more about digital payments, digital wallets and digital currency.

xfers spf scam intervention
Community partnership medals awarded to Xfers by SPF / Image Credit: Robert Chai

Xfers has since partnered with the Singapore Police Force (SPF) in cracking down cyber scams, and have received police awards in 2018 and 2020 for their part in helping to fight cybercrime.

This year, Xfers was also recognised by the SPF due to their contributions in scam intervention. To better protect its users, Xfers has developed a long-standing relationship with the Anti-Scams Centre to enhance the identification of suspicious transactions, which enabled them quickly freeze funds should the need arise.

For these efforts, Xfers has been awarded the Outstanding Community Partnership Award by SPF in July 2021.

To further strengthen their trust and credibility, Xfers was also granted a Major Payment Institution license from the Monetary Authority of Singapore (MAS) early this year. This helps assure customers that their monies are safeguarded by their partner bank in accordance with the Payment Services Act (PSA).

When asked if obtaining the license has been challenging, Samson simply said that MAS has been very “supportive and consultative throughout the entire process”, especially considering the fact that they were one of the first online wallets when they submitted the initial application.

He added that Xfers maintains close engagement with MAS, ever since they received approval from the central bank to be an approved holder of a Widely Accepted Store Value Facility in 2019. They were the only fintech startup in Singapore that has joined the ranks of EZ-Link Card, NETS CashCard, NETS FlashPay and CapitaVoucher.

“Through the various MAS consultation papers on the proposed payments regulations, it was a good opportunity for us to put forth our views to better advance the fintech and payments industry to ensure Singapore’s global competitiveness. We’re heartened to note that MAS has been generally receptive to our feedback and the industry feedback,” said Samson.

With the upcoming changes to the PSA, he added that Xfers will continue to engage MAS and continue to be agile in their product offerings and business models.

Standing out from the competitive fintech crowd

xfers founders
Xfers’ co-founders / Image Credit: Xfers

From starting out small in an apartment, Xfers today has over 200 employees spread across their offices in Singapore, Indonesia, Taiwan, Vietnam and the Philippines.

Backed by 500 Startups, Golden Gate Ventures and Facebook co-founder Eduardo Saverin, Xfers has also served more than 10 million people and processed more than US$800 million of transactions in 2020.

“We are truly appreciative of our early adopters who trust us to do the right thing as we continue to build a trusted and secure payment system. Without their support, we might have never gotten the chance to scale up,” said Samson.

However, the fact that the fintech industry is very competitive didn’t make it any easy for them.

Commenting on the fintech landscape in Singapore, Samson described it as “varied” and “sophisticated” because of the generally savvy consumers, ready infrastructure (both physical and technological), promotion of innovation, skilled workforce, and a progressive regulatory framework.

“All these help fintech companies ideate, innovate, and grow exponentially to bring new solutions to market. That said, the fintech landscape is equally competitive when we have such a landscape.”

At the same time, the colourful fintech landscape in Singapore has presented them with a viable business opportunity to design seamless and compliant payment flows.

“In Singapore, we are spoiled for choice in the range of payment options we have — cash, cards, bank transfers, e-wallets et cetera. Most of our merchant customers would be first thinking of accepting card payments, especially when consumers are incentivised by miles or reward points to spend on card.”

Unfortunately, this means that the merchant has to bear the card acceptance costs, which range anywhere from 1.5 to 3.9 per cent. This in turn trickles back down to the consumers in the form of increased prices.

By building an alternative payment network, we are excited with the wave of alternative payments so that merchants now have more digital payment choices. We will continue to integrate more payment options to better support our merchants and the local payment behaviours of consumers in the sector.

– Samson Leo, co-founder of Xfers

Xfers is also betting big on blockchain. The team strongly believes that distributed ledger technology (DLT) and blockchain is a foundational technology that would transform the way we pay.

In fact, banks and central banks are already exploring applications of DLT in trade finance and Central Bank Digital Currency (CBDC).

ziliqa xfers stablecoin
Ziliqa and Xfers team / Image Credit: Xfers

Back in 2019, Xfers had a chance encounter with the Ziliqa team, which led to them working together to launch the StraitsX XSGD stablecoin on both the Ziliqa and Ethereum blockchain.

“The Ziliqa blockchain is able to process more transactions at a cheaper rate, in the range of thousands of transactions per second at a gas cost in the cents, compared to Ethereum network processing,” explained Samson.

Since the StraitsX initiative was launched in October 2020, it has seen significant growth. As of September 2021, its XSGD has surpassed over S$1.5 billion in on-chain transaction value.

“We’ve also provided APIs to over 10 different digital assets platforms, enabling them to seamlessly accept and disburse funds to their users. Through these APIs, StraitsX has processed over S$2 billion in digital asset-related transactions in 2021 alone.”

XSGD has also become available on various Decentralised Finance (DeFi) applications, including Uniswap, Zilswap, DFX Finance and 1inch.

Riding on the digitalisation wave

Covid-19 has been a turbulent time for most businesses. For Xfers however, the pandemic has served as a “very big business opportunity” for them as it helped to accelerate digital commerce and digital payments in Singapore and the region.

“With the various movement restrictions, people were starting to shop and pay online, when in the past, their behaviour may have been to physically visit the shop and then to pay with cash,” observed Samson.

With the onset of Covid-19, Xfers has put in place a Business Continuity Plan to better cope with the evolving pandemic.

Many considerations were actually made when creating the plan. For instance, the need to preserve the workforce of their Operations team as Xfers’ onboarding and customer support processes would be at a standstill without them.

Fortunately, Covid-19 did not pose any operational impact, especially considering that compared to the same period last year, Xfers’ transaction processing volumes continued to at least double, and new user signups increased by two to six times.

“As a fintech company, being able to adapt and react to change quickly has always been one of our core strengths — it has essentially become a part of our culture.”

Despite the pandemic, Xfers has also charged ahead with its growth plans. Earlier in March, Xfers partnered Indonesia-based Payfazz to form FAZZ Financial Group (FFG).

xfers payfazz
Tianwei Liu (left) and Hendra Kwik (right) / Image Credit: Xfers

Following the formation of this new entity, Xfers now serves as the designated business-to-business (B2B) arm of FAZZ, with a focus on enabling market access in SEA through digital financial services.

“We first met the Payfazz founders back in 2016 after their Y Combinator program, and we hosted them in our apartment when they came to Singapore to explore expansion opportunities here,” recounted Samson, who also serves as the Group Chief Legal Officer of Fazz Financial Group.

“Later in 2017 and 2018, when we were thinking of expanding to Indonesia, they returned the favour, hosting us in their office and helping to make introductions. Tianwei and Hendra (co-founder of Payfazz) continued keeping in contact.”

In 2020, the stars aligned and both parties felt that they have a huge synergy in their goals of enabling and reinventing financial access for consumers and businesses in SEA.

Moving forward, Samson said that Xfers will continue to expand regionally and build their business within the payments, digital asset, e-wallet and e-money space, as they inch closer towards being the “Square for Southeast Asia”.

Featured Image Credit: Xfers

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