The Australian rollout of UK digital payments provider Revolut has hit a roadblock following a request from the Australian Securities and Investments Commission that the company stop activating new customer accounts.
Revolut was granted an exemption in January to operate in Australia without a financial services licence for a nine-month period to the end of October.
The company has applied for a full licence with ASIC but was unable to secure approval before the exemption period expired last week.
An ASIC spokesman confirmed to Banking Day that the regulator agreed to extend the licensing relief for another six months on a condition that no new customers were given access to Revolut's app-based money transfer and payments platform.
"We've provided another extension for up to six months on the licensing relief, although Revolut has agreed not to take on any new clients until such time as an Australian Financial Services Licence(AFSL) is secured," the ASIC spokesman told Banking Day.
Under the extended relief Revolut is permitted to continue servicing local customers participating in a beta trial of its platform but will not be able to join thousands of others to its service who are currently on its waiting list.
Pressure is mounting on the company's Australian management to expedite the licencing process so that the business can begin marketing its services unfettered by the new constraints.
Revolut currently operates through its UK parent entity in Australia, but recently registered local operating and holding companies to meet the licencing requirements of ASIC and the Reserve Bank's payments department.
The licencing delay means that Revolut is not likely to undertake a full public launch of its products in the local market until sometime in 2020.
The ASIC spokesman declined to comment on the reasons for Revolut not securing a licence before the 31 October deadline.
Readers of Banking Day who are participating in the beta trial say they are having a mixed experience using the platform.
While most say they are impressed by their ability to transfer money overseas at a fraction of the cost imposed by Australian banks, they are disappointed with the time taken by the Revolut platform to process transfers to local bank accounts.
One reader said Revolut was taking up to five business days to complete domestic transfers. The same customer was asked to make a "turbo payment" of $10 if he wanted the transfer to be completed within three days.
Revolut's business practices have come under intense scrutiny from British media outlets this year as it has consolidated its place as the fastest growing fintech startup in the world.
Earlier this year Revolut's founder Nik Storonsky was forced to defend the company's compliance culture after a whistle-blower highlighted alleged breaches of British anti-money laundering laws.
The former Revolut employee claimed that Storonsky ignored advice from compliance staff about potential weaknesses in the company's AML processes.
While Storonsky rejected the whistle-blower's claim, wide media coverage of the allegations raised concerns about management culture and led to the recruitment of additional compliance and financial crime experts across Revolut's global operations.
In March Storonsky conceded that he was "not proud" of some of the "mistakes" made by the company after former staff complained in an article published by Wired.co.uk that they were asked to work for free.
However, such controversies have not stymied Revolut's international growth, with the company's customer base eclipsing 7 million this year.
Revolut is eyeing several major country expansions over the next 12 months following final approvals from Singaporean regulators clearing the way for it to begin marketing a full menu of products.
A launch is imminent in the United States where Revolut is partnering with global payments scheme provider, Mastercard.