The Future of Global Payments : How FinTech is Impacting Startups & Small Businesses
Updated on 6 August 2020: Singapore is an alternative to Hong Kong in term of international banking service hub. Some Singapore banks are offering remote opening service of their business bank account for a limited time only, and only selected clients are eligible to. The banks can support companies incorporated in Hong Kong and other “offshore” jurisdictions. Check the details of Singapore business bank account opening here.
When Hong Kong banks are turning down applications and closing accounts, size of disappointed business owners is growing. Emerging tech companies hear their demand for a quick and straightforward solution to open business bank accounts.
They claim their solution as a high-tech alternative to traditional banks, they name their account as Multi-currency Business Account, and they welcome startups to kickstart their business with their account.
What Is the Pinpoint of the Alternative-to-bank Solution?
Unique Bank Account Number
The platforms are not helping the startups and small business owners to apply for a bank account as if what we are doing now. Instead, they assign their clients their own unique bank account number under their business name.
You may be confused; it seems that the platforms own a bank so they can create the account to their customers. No, they are not banks, but they have partnered with the licensed banks to offer so-called segregated bank accounts which are under the name of the clients, not the platform.
Your Money Is in the Bank
The platforms are working as a platform to connect their clients and the clients’ assigned bank accounts. The deposit of clients is not holding in the hand of these platform owners. The clients’ money is safely storing in the segregated bank accounts of licensed banks; each sub-account is under the name of the client. In case the platforms go wrong, the money is still in the bank.
Online Account Opening Application, Simplified Due Diligence, Quick Approval
As the platforms are not the bank, they do not subject to the same set of requirements of banking regulatory. This legal framework gives them flexibility in client onboarding procedures as such.
First of all, they can accept applicants to open their account remotely via their online platform; they do not meet their clients in person.
Secondly, they can receive reduced documents comparing with that of banks. One significant relief to startups is that these platforms do not require “proof of business” on application. It is because, technically speaking, they operate similar to the provider of the stored-value facility, e.g. Octopus Card.
Thirdly, without the “proof of business” documents, they can skip all the potential analysis which the banks could spend months on this. Therefore, they can finish the review to approve the account opening in 2 weeks or less.
One Platform : Multi-Accounts from Multi-Banks for Better Multi-Currency Conversion
A platform can partner with various banks to set up the arrangement of segregated bank accounts. Therefore, a platform can provide segregated bank accounts of different banks in different jurisdictions for their users.
Better currency conversion rate is the major advantage of setting up the segregated bank account in other countries. For example, a seg bank account in Japan, which has the base currency in JPY is better to receive JPY payment than that of HKD account because the conversion from JPY to HKD is skipped.
Any Limitation of the Multi-currency Business Account?
After having a grasp that the inner structure of your Multi-Currency Business Account is the linkage of various segregated bank accounts under the management of the platforom, you probably can think of its disadvantages comparing with a traditional bank account.
In practice, each segregated bank account must have a maximum balance limit. The limit is determined by your platform owners based on your business’s expected trade volumes.
Some platforms may impose additional limits on how much you can transfer to other banks.
No Value-Added Benefits
You will not gain any interest income on-top of your fund in the Multi-Currency Business Account. It is because the platform is not a bank so that you will not be asked to buy the financial products, e.g. investments, insurance, savings, and loans.
Simply put, the platforms charge you the handling service fee on each inbound and outbound transactions of your Multi-Currency Business Account. In addition, you need to bear all the external bank’s charges, which usually incur during the bank-to-bank transfer.
A Quick Comparison
|Multi-Currency Business Account
in Hong Kong
|Conventional Business Bank Account
in Hong Kong
|Account provided by||Segregated account in other banks||The same bank|
|Bank-to-Bank Transfer Globally||YES||YES|
|Savings (Interest Gain)||NO||YES|
Remotely Register Your Hong Kong Company and Open Your Multi-currency Business Account Online!
Do you know everyone can kickstart their business online? We can register your Hong Kong limited company remotely and then open the Multi-Currency Business Account online. Check here for the incorporation package, or here to check the details of Multi-Currency Business Account.
You can directly start the Multi-Currency Business Account now, below are the links of our service providers:
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