HSBC launches multi-currency digital wallet as payments remain issue for FX brokers

HSBC has launched a multi-currency digital wallet, HSBC Global Wallet, that allows businesses to hold, send and receive cash in multiple currencies, simply and securely, using a single global account.

The product aims to address the transaction challenges that companies face when dealing with cross-border payments: 45% of small and medium-sized enterprises say that currency fluctuations are their biggest concern when making and receiving payments overseas, with another 20% most concerned about the speed of payments, according to a survey.

HSBC’s new multi-currency digital wallet aims to take back market share lost to startups like TransferWise and Revolut which have revolutionized the sector, making it easier for everyone to move money around the globe.

HSBC Global Wallet solves exchange rate execution and settlement issues by providing fixed rates to customers before they execute the payment and then, via the bank’s global payments network, they are able to ‘pay like a local’ in some destination markets, with money usually arriving within minutes.

Diane S Reyes, HSBC’s Global Head of Liquidity and Cash Management, said: “HSBC Global Wallet makes it just as easy for our customers to deal with a supplier or a client on the other side of the world as it is to deal with one on the other side of town.

“By fully integrating this solution into our everyday business banking platform we’re giving our clients a virtual presence in markets around the world.”

HSBC Global Wallet is being launched initially for customers in Singapore, the UK, and the United States. Customers will be able to make and receive payments in US dollars, euros, UK pounds, Canadian dollars, Hong Kong dollars, Singapore dollars, Australian dollars, and Malaysian ringgit.

The solution is due to be rolled out to further markets over time, and more currencies and features will also be added to the platform.

Richard Bibbey, HSBC’s Head of FX, Emerging Market Rates and Commodities, commented: “HSBC Global Wallet users can build trust with their own customers and suppliers in other markets with faster, more reliable international payments and receipts – and have confidence in growing their businesses internationally.

“With people leading increasingly digital lives, we’ve made it one of the key pillars of the bank’s strategy to deliver faster, easier and more secure digital banking across our global network.”

The FX trading industry operates internationally, but offshore brokers face more challenges than others in regard to FX payments solutions.

Ever stricter banking rules around the world and continuous global efforts to stop money laundering have presented a specific challenge to offshore FX brokers.

The most common ways to process incoming and outgoing wires are via banking, but offshore brokers have no access to tier 1 or tier 2 banks. They have to settle with tier 3 banks from countries with underdeveloped banking systems. These have poor customer support and require in-person interviews. Rejections are very common.

A better option would be an Electronic Money Institution (EMI). They usually have good KYC standards and are generally accepted by other financial institutions.

Payment Services Providers (PSPs) or e-wallets are very popular (eBay, Neteller, Skrill, etc). They charge a lot of fees but are still more affordable than a bank account.

Crypto deposits can be made to PSPs, banks, EMIs. The amount of crypto deposits has significantly increased but they are more expensive than regular wires. However, there are no fees.

A general rule of thumb is not to settle with a few providers. Instead, brokers should aim toward a wide range of payment options to better serve their clients.

Last but not least, brokers should never apply to all at once. This way, they become aware of requirements and adjust as they go.

FX brokers from St. Vincent, Marshall Islands, Hong Kong, and other low-cost jurisdictions are quite limited in the ways they can process incoming and outgoing payments deposits, and withdrawals, but this doesn’t have to hamper their business.

Advanced Markets’ Anya Aratovskaya has recently held a webinar covering the most common payment solutions available for offshore FX Brokers as well as to shed some light on what can be expected.