Singapore: Jubilee Capital leads $3m Series A in Latipay

Photo from LatiPay Facebook page.

Auckland-based fintech venture Latitude Technologies, an online payments company operating under the LatiPay, has closed a $3 million Series A investment led by Singapore-based venture capital firm Jubilee Capital Management.

Others investors participating in the funding round included Tuhua Fund, the Zino Fund of New Zealand’s ZIno Society and an angel investor. Existing shareholders of the company include Jim Rogers, the Chairman of Rogers Holdings and Beeland Interests.

Last November, Jubilee Capital announced the launch of the Jubilee Tech Fund  with a first close of $30 million. The target for this particular fund is $100 million. It targets investments in high-growth technology enterprises, with LatiPay being its third investment.

According to the company, this latest round of funding will allow LatiPay to expand into the US and Singapore markets, as well as onboarding more merchants onto its platform. It will expand to Singapore in May 2017.

LatiPay’s customers base are exporters, tourism and education providers, in alignment with Chinese compliance rules. Incepted by Peter Wei to permit Chinese consumers to pay for goods and services to merchants using renminbi, it commenced operations in December 2016 and allows merchants to receive payments for goods sold or services rendered directly in their bank accounts in local currency.

The service functions with all major Chinese banks in China, collecting payments from both debit and credit cards and can be made online. It also has an unlimited purchase amount, exceeding the $50,000 annual cap on transactions. This services is at no cost to merchants, with Chinese payers able to make payments through their preferred bank payment channels or e-wallets such as AliPay or WeChat pay, JDPAY and Baidu wallet.

The service entered into partnerships with Alibaba and WeChat in May 2016 in New Zealand, as part of facilitating more sales between Chinese consumers and local New Zealand businesses, according to chief executive Leigh Flounders.

Flouders says that about 25 per cent of China’s population possess a credit card, which are used in only 12 per cent of online purchases within China. Meanwhile mobile payment platforms such as AliPay and WeChat’s account for 40 per cent of online transactions. This development reflects changes in the economic profile China’s consumers.

Forecast of Chinese consumer profile. Credit: McKinsey,2012

Thee shifts in China’s consumer profile are common features of rapid industrialisation – rising incomes, urban living, better education, postponed life stages, and greater mobility – reflect similar development during the growth phases if Japan, South Kore and Taiwan. However, unique factors such as the one-chid policy and economic imbalances across China’s regions also impact this profile.

Commenting on the partnership with WeChat and Alipay back in May 2016, Flouders stated: “It’s critical for New Zealand businesses to understand there is no point offering a credit card facility to pay for your goods and services for Chinese consumers who want to interact with you but aren’t carrying that credit card. You explain this to exporters or education providers in New Zealand and they get it immediately, because there is so much dissatisfaction at a merchant level, it’s so frustrating for them.”

He added, “It’s solving a problem and opening up a market which is just dying to interact. For New Zealand merchants, it’s about ensuring those Chinese payers can pay in their currency of choice, but also their payment platform of choice.”

Funds transferred to the platform become part of a segregated account which is subjected to regular audits, with payments in CNY being deducted from the payers bank account in real-time with a chargeback rate below 0.1 per cent.

LatiPay explains that payment notifications are instant and made to both the payer and payee. It adds that its currency exchange and cross-border remittance operations are authorised by SAFE (State Administration of Foreign Exchange) and PBoC (People’s Bank of China), China’s central bank.

In the broader context, this comes at a time when Beijing is attempting to stem capital outflows and seems to be enjoying modest success.

However, these methods for controlling capital flows may be unsustainable and are likely to to drive the development of services similar to LatiPay at a time when Chinese consumers are expected to drive global growth.

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