Nium turns global amid tighter regulations in home market

The evolution of firms into financial service providers has been a boon for fintech enablers. These days, “everybody wants to be a fintech,” Prajit Nanu, co-founder and CEO of open money platform Nium (formerly Instarem), says.

To do so, these fintech hopefuls are roping in infrastructure-as-a-service companies to help them build out relevant capabilities and circumvent costly and time-consuming processes. It’s a big opportunity Nium is banking on.

Nium CEO Prajit Nanu / Photo credit: Nium

The startup, which began as a consumer-focused remittance company in 2015, lets companies ride on its financial infrastructure to perform tasks ranging from cross-border payments and card issuance to foreign exchange and treasuries. It has seen its enterprise business scale rapidly in the last four years, prompting a rebrand last October.

In 2019, Nium handled US$5 billion worth of transactions for consumers and enterprises across the globe – a number it expects to triple this year. “We’re doing so much more than remittances [now],” Nanu says.

‘Unnecessary complexity’

Recent regulatory changes in its home market of Singapore such as the Payments Services Act may see the use of digital wallets – which Nium provides for both its retail and enterprise customers – curtailed.

Nanu says the act introduces “unnecessary complexity” in the ecosystem.

Aimed at addressing the risks that come with new payment methods, the act places a S$30,000 (US$21,500) cap on the amount of transactions flowing out of personal stored-value facilities such as e-wallets. It also imposes a limit of S$5,000 (US$3,600) for balances in such facilities at any given time.

“These caps help to further protect customers by limiting a customer’s potential loss from his e-money account,” Minister for Education Ong Ye Kung said in January 2019 during the second reading of the Payments Services Bill. “More importantly, the caps will ensure continued stability of the financial system by reducing the risk of significant outflows from bank deposits to non-bank e-money, which can undermine the stability of our banks.”

Nanu says that while the new rules do not affect Nium’s money transfer operations, they limit the number of customers that Nium’s enterprise clients can serve.

“Prior to this, we could provide anyone with a neobanking experience. For example, using our infrastructure, a Grab or Gojek customer could launch a bank by giving customers a virtual account number. Suddenly, they can only onboard people whose salaries are less than S$30,000 a year,” he explains.

Photo credit: Monetary Authority of Singapore

The changes similarly impact other fintech companies such as cross-border money transfer company TransferWise, which has Singapore as its Asia-Pacific headquarters.

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