Zing suffers the same fate as PagoFX as HSBC fails to compete with Wise & Revolut

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HSBC is preparing to scrap its new international payments app Zing, launched a year ago to rival Wise and Revolut, after struggling to implement compliance processes for the service.

Financial News reported yesterday that the bank was planning to inform employees that it has decided to close down the app.

As of Thursday 23 January, Zing’s website is still accessible and the app available for download, however, with no mention the service is set to be closed down.

Zing launched at the start of 2024, acting as an independent fintech. It is legally a trademark of an HSBC subsidiary.

Zing is an e-money institution rather than a bank, meaning it is not covered by the same regulations or protections, such as the Β£85,000 Financial Services Compensation Scheme guarantee on bank deposits.

Like Wise, Zing offers currency exchange services at the midmarket exchange rate, but it charges a lower initial conversion fee than Wise offers at just 0.2%

It also currently charges zero conversion fees for the first Β£500 or equivalent amount converted per calendar month, until April 30, 2025.

The reported move by HSBC to close the service comes after it had attempted to overhaul Zing’s compliance controls under a dedicated team called Project Green.

Project Green was launched last summer to develop fraud controls and bring the app in line with regulatory requirements and HSBC’s anti-money laundering policies, Financial News reported, citing internal documents.

That came as the bank switched Zing’s focus towards the UK market and fixing problems with audits, an unnamed source told the publication.

It had previously planned to expand its offering to the Netherlands to develop a foothold in Europe.

What does this mean for fx tranfser apps?

Zing’s pricing is very attractive, given it charges even lower fees than its dominant low cost competitor Wise.

Clearly, HSBC has been keen to attract users to the app. Yet as of April last year it had less than 20% of Wise’s monthly downloads, according to a report by start-up news publication Sifted that month.

Given it had the backing of a global bank, it goes to show the challenges for providers looking to enter this space.

Another major bank, Santander, ran into similar issues with its attempt to enter this space.

In 2021 the Spain-headquartered international bank closed down its PagoFX app just a year and a half after it first launched, after it failed to approach the scale necessary to become profitable.

Similar challenges are likely to face any other new entrants to this space.

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