High AXS Payments Forced Chocolate Finance to Adjust Miles Rewards, Instant Withdrawals

Chocolate Finance had previously suspended instant withdrawals due to an unexpected surge in AXS bill payments, driven by customers maximising its miles reward programme, said Chief Executive Walter de Oude.

The firm told The Straits Times that this surge made the programme unsustainable, leading to the removal of AXS payments via its Visa debit card on 5 March.

The rewards scheme, launched in partnership with HeyMax on 11 February, offered two miles per dollar on nearly all transactions, including categories typically excluded from similar programmes, such as insurance, utilities, and education.

This allowed customers to accumulate miles through AXS bill payments at an unprecedented rate, prompting the firm to intervene.

De Oude explained that while the scheme successfully attracted new users, the volume of AXS transactions exceeded projections, making it unsustainable.

The company routinely adjusts its offerings to maintain long-term viability, he said, adding that any future reinstatement of AXS payments would only be considered if it aligns with sustainable business operations.

The firm acknowledged that its communication regarding the change was inadequate, leading to confusion among customers.

Many feared liquidity issues, triggering a wave of withdrawal requests.

In response, Chocolate Finance paused instant withdrawals on 10 March, clarifying that the move was to manage increased transaction volumes rather than due to liquidity constraints.

Chocolate Finance reaffirmed that customer investment funds remain secure and that withdrawals are proceeding in an orderly manner.

The company, which operates under Chocfin’s capital markets services licence from the Monetary Authority of Singapore, is required to segregate and ringfence customer funds, which are held separately with custodians HSBC and State Street.

Allfunds, which provides fund dealing and custody services for Chocolate Finance, also confirmed that customer investments remain safeguarded under Singapore’s regulatory framework.

“Customer investment funds´ holdings are completely segregated and ringfenced, as required by Singapore’s regulations, which means that the safety of investment fund holdings is assured,”

said David Pérez de Albéniz, CEO of Allfunds Singapore.

Instant withdrawals rely on Chocolate Finance’s liquidity pool, which is replenished through a typical two-day settlement process.

A sudden spike in redemptions can deplete this buffer, requiring temporary pauses.

The firm did not disclose details on the size or source of its liquidity reserves.

Backed by investors including Peak XV (formerly Sequoia), Prosus, and partners of DST Global, Chocolate Finance has reverted to its standard three- to five-day withdrawal cycle, with some cases taking up to 10 days.

Chocolate Finance stated that withdrawal requests are being processed in line with standard investment fund redemption cycles, with customers expected to receive their funds within three to six business days.

De Oude said instant withdrawals would resume once transaction volumes stabilise but did not commit to a timeline.

He expressed confidence that as customers receive their funds, concerns will ease, allowing the firm to reinstate the instant withdrawal programme.