Chocolate Finance, which launched in 2024 with the aim of disrupting traditional banking with Gen Z-friendly financial products, introduced a promotion in February 2025 offering two air miles per dollar spent on its debit card, capped at S$1,000 per month. The promotion, in partnership with rewards platform HeyMax, also included bill payments via AXS, a payment platform commonly used for bills and fines. This was an unusual move, as such payments are typically excluded from rewards programs.
The promotion quickly gained traction, but the surge in bill payments through AXS far exceeded Chocolate Finance's expectations. On March 5, the company abruptly halted payments via AXS, citing the program's unsustainability. This decision, coupled with poor communication, triggered a wave of customer frustration and online criticism. By March 10, Chocolate Finance had frozen instant withdrawals and capped debit card spending at S$250, further exacerbating the situation.
The backlash was swift and severe. According to sentiment analysis by Carma Asia, 42.3% of conversations about Chocolate Finance on social media platforms like X (formerly Twitter) and Reddit were negative, with only 6.1% positive. Customers expressed frustration over the sudden restrictions, with many feeling penalized for using the card as advertised. Overseas users, in particular, were inconvenienced by the spending cap, as Chocolate's Visa cards were popular for their zero foreign transaction fees.
The crisis also raised concerns about the company's long-term viability. Customers questioned the mismatch between promised returns and underlying investments, and some highlighted the lack of SDIC (Singapore Deposit Insurance Corporation) protection, emphasizing that Chocolate Finance is not a bank.
PR experts were quick to criticize Chocolate Finance's handling of the crisis. Christel Goh, CEO of Grow Public Relations, pointed out the lack of a crisis communication plan and the failure to respond quickly and transparently. She emphasized the importance of goodwill gestures to retain customer trust and the need for a real spokesperson instead of faceless corporate responses.
Ilka Gobius, CEO of Pinpoint PR, highlighted the risks associated with loyalty programs, noting that they are cost centers, not revenue generators. She stressed the importance of proper budgeting, oversight, and contingency plans to avoid financial sinkholes.
In the days following the crisis, Chocolate Finance took steps to address customer concerns. On March 15, the company announced that it had started processing withdrawals and raised the debit card spending cap to S$1,000. By March 17, 90% of withdrawal requests from March 10 had been processed, with the remaining expected to be completed by March 18. The company also reiterated its commitment to delivering a secure and rewarding financial experience.
Despite these efforts, trust remains fragile. Some customers have expressed doubts about whether they will return to the platform, citing poor communication and handling of the crisis.
The Chocolate Finance crisis offers several important lessons for fintech companies:
- Crisis Preparedness: Companies must have a robust crisis communication plan in place. Quick, transparent, and empathetic responses are crucial to maintaining customer trust during a crisis.
- Sustainable Loyalty Programs: Loyalty programs should be carefully planned and budgeted, taking into account potential scale, customer behavior, and cost impact. Marketing teams must understand that loyalty is an investment with risks.
- Customer Communication: Clear and timely communication is essential, especially when making changes to services or promotions. Customers should never feel left in the dark.
- Regulatory Compliance: Fintechs must ensure that their operations comply with regulatory requirements and that customers are fully aware of the risks associated with their products.
- Customer Trust: Trust is hard to earn but easy to lose. Companies must prioritize customer trust and take proactive steps to address concerns before they escalate into full-blown crises.
The Chocolate Finance saga is a cautionary tale for fintech companies navigating the competitive landscape of digital banking. While the company has taken steps to address the fallout, the incident underscores the importance of crisis preparedness, sustainable business practices, and transparent communication. For fintechs aiming to disrupt traditional banking, the lesson is clear: growth must be balanced with responsibility, and customer trust should never be taken for granted.
As the fintech industry continues to evolve, companies must learn from Chocolate Finance's missteps to build resilient, customer-centric businesses that can withstand the challenges of an increasingly competitive and scrutinized market.