SINGAPORE: Multi-currency e-wallets have grown in popularity by touting convenience and cost savings, but they can also do more to address concerns about fraud prevention and resolution, experts said.
As its name suggests, a multi-currency e-wallet allows users to convert and hold different currencies on a mobile app.
In the post-pandemic travel boom, the likes of YouTrip, Revolut and Wise have seen more users, mainly due to their competitive exchange rates compared with traditional banks or moneychangers. They are also cheaper to use than credit cards, with lower or zero fees for overseas transactions.
These e-wallets received a boost late last year when the Monetary Authority of Singapore (MAS) revised its caps on e-wallets.
Under the revised rules that took effect on Dec 15, users can hold up to S$20,000 (US$14,700) in their e-wallets, up from S$5,000. The annual spending limit also went up from S$30,000 to S$100,000.
YouTrip was the first travel wallet to raise its user limits in line with the regulatory changes. It also put in place new security measures, such as a “kill switch” for customers to freeze their account, as part of meeting the authorities’ expectations on mitigating scam risks.
Other players have said they will follow suit.
But experts told CNA that while the multi-currency e-wallets have their own security systems and policies for customer support in the event of fraud, they may still be less secure and efficient than conventional financial institutions which are subject to stricter regulations.
Singapore Management University’s (SMU) Assistant Professor of Finance Aurobindo Ghosh said banks typically have sizable teams monitoring user data and patterns to detect fraudulent transactions in real time. Such capabilities are also being enhanced by technology like artificial intelligence.
But these are “costly”, and banks will have to pass on some costs as fees to its card holders in order to keep providing extensive security and other features, he said.
On the other hand, multi-currency cards primarily “act more like digital wallets and debit facilities”. They also face less regulatory oversight and usually operate with leaner manpower to remain cost-efficient, experts said.
“So, whenever we are choosing a multi-currency digital wallet, we forego some of the enhanced security features for lower cost,” said Asst Prof Ghosh.
