SINGAPORE: When Chocolate Finance discovered that some consumers were “gaming” its kilometers compensation structure by making large payments on AXS machines, the economic services program decided to “nip it in the bud”.
This led to ,” a lot of unhappiness that such a lucrative benefit was suddenly cut short”, founder and CEO Walter de Oude said on Monday ( Mar 10 ).
The change wasn’t effectively communicated to users, who grew uneasy and started withdrawing their cash  , – thus depleting the pool of cash that Chocolate Finance maintains for instant payments.
It inevitably meant the quick withdrawal support had to be temporarily suspended.
Mr de Oude was speaking to CNA in an exclusive , meeting time after Chocolate Finance issued a declaration attributing the suspension , to an “unusually great” number of requests.
Chocolate Finance is operated by Chocfin, which is licensed and regulated by the Monetary Authority of Singapore ( MAS ) to perform fund management activities.
In response to CNA’s questions, MAS said it has instructed Chocfin to maintain it returns resources to users in an orderly manner and to keep clients informed of innovations.
“MAS is separately querying Chofin about its representations of its instant withdrawals ( programme )”, a spokesperson said.
” ABSOLUTELY HUGE PAYMENTS” ON AXS
When Chocolate Finance designed its miles reward programme, the firm wanted its debit card to be” all inclusive” so that customers could earn on nearly anything they spent on.
This included education fees and AXS, a bill payment platform.
Mr de Oude pointed out that shops usually pay a fee to services firms like Visa or Mastercard each time a card is used, and that the fee is shared with the company issuing the card , – Chocolate Finance, in this case.
When a card is used at an AXS machine, however, Chocolate Finance doesn’t get any benefit.
” Yet, we were sponsoring the miles”, said Mr de Oude, who previously founded insurance firm Singlife.
Chocolate Finance knew its miles programme would not be sustainable based on AXS transactions alone, but had hoped that the gains from other transactions would” subsidise” the miles it was sponsoring.
The company thought there would be a balance that way, but it didn’t play out in reality.
” There was a little bit of gaming going on by customers”, said Mr de Oude, adding that it gradually became “quite evident” that the company could not keep giving miles on AXS transactions.
” We had a couple of customers making absolutely huge payments on the cards… specifically on the AXS to really maximise miles”.