US-based Episode Six is banking on Hong Kong demand for virtual payments, SME lending

Episode Six, or E6, an Austin, Texas-headquartered global provider of payment processing and digital ledger infrastructure for banks and financial institutions, will expand its footprint in Hong Kong this year on the back of growing demand for virtual-payment technologies, the company’s executives told the Post.

“We’re seeing increasing demand for virtual card payments, which our platform is perfectly suited for,” said John Mitchell, E6’s co-founder and CEO. “We’re also seeing an increase in demand for our virtual account, and we’re expected to have growing penetration around these two products in Hong Kong throughout the rest of the year.”

Brian Muse-McKenney, E6’s chief revenue officer, said that small and medium-sized enterprise (SME) lending is another area that the start-up will focus on this year.

“We know there’s a push from the regulators to see more innovative working capital solutions deployed to SMEs, and we have a product that takes the concept of ‘buy now, pay later’ [BNPL] but industrialises it and makes it fit for purpose for commercial banks to offer to SME customers,” Muse-McKenney said, adding that there is some “good traction” taking place in the market, and E6 is looking to officially launch the new product in the second half of this year.

BNPL is a short-term instalment loan that allows customers to make purchases and pay for them later, without being charged interest.

E6, whose partners include PayMe, HSBC’s mobile payment service, and MasterCard, is also confident about the growth potential of the Asia-Pacific market.

“The problem across the region is that payments technology needs to be modernised,” said Mitchell. “Asia-Pacific is growing for E6, and some of the new payment products require technology that’s not readily available in the markets that we’re entering, whether that’s around contactless QR code payments, or interoperability between payment schemes.”

Both executives also highlighted Japan as “high on the list” for the start-up.

“Japan is a particularly compelling market for E6,” said Mitchell, adding that E6 has been on the ground in Japan since 2017. With positive macroeconomic trends and a fintech-friendly regulatory environment in Japan, financial institutions are investing in modernising their payment infrastructure, he added.

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“Financial institutions in Asia have had more direct competition from fintechs, and thus they have had to wake up sooner and are more advanced in their thinking in terms of the digital experiences they need to create,” said Muse-McKenney.

“The payments innovation landscape in Asia, the idea of faster payments, is a really progressive agenda that’s being pushed, and so banks and financial institutions more broadly are at the forefront of payments innovation, whereas within [Europe, the Middle East and Africa] and North America, they’re more catching up.”

While also steadily expanding in Europe and North America, Asia remains E6’s largest market from both a revenue and accounts perspective, since the company was founded in 2015, Mitchell said.

Hong Kong SMEs more confident of growth than their Singapore, mainland peers

E6 in late April announced a partnership with Singapore-licensed financial institution DCS Card Centre that will allow fintech companies to issue their own branded credit cards through E6’s customer interface.

Powered by E6’s card issuance technology, the solution reduces the process needed to launch a new credit card from up to six months to a matter of weeks. It also incorporates access to a virtual account that allows for top-ups with fiat currency through bank transfers, or with digital assets via DCS tokens, which are directly issued by DCS.

With a presence in more than 35 countries, E6 completed its most recent financing round in March 2023, raising US$48 million from investors led by Avenir. E6’s other existing backers include HSBC, Mastercard, SBI Investment Co and Anthos Capital.