Singapore's Payment Services Act: A New Framework to Spur Financial Services Innovation

Money-changing licensees may only conduct money-changing services, namely the service of buying or selling foreign currency notes. Companies that provide other payment services must hold a standard payment institution licence or major payment institution licence instead.

Who Can Apply

The law requires that the individual applicants, partners or directors of a company applying for this license should have a minimum of 1 year's relevant working or business experience on a full-time basis.

The following governance requirements must also be met:

Individuals. For sole proprietors, the applicant must be a Singapore citizen.

Partnership or Limited Liability Partnership. The majority of partners should be Singapore citizens. If there are only two partners, only one needs to be a Singapore citizen.

Singapore-owned Company. More than 50% of the equity shareholdings should be beneficially owned and effectively controlled by Singapore citizens. A majority of the board of directors of the company should be Singapore citizens. If there are only two directors, only one of the directors needs to be a Singapore citizen.

Foreign-owned Company. In the case of a Singapore-incorporated, wholly-owned subsidiary of a foreign bank, or a foreign company primarily engaged in money-changing, the parent company must:

• Be of significant size. In the case of a foreign bank, it needs to be ranked among the top banks in the country where it is incorporated.
• Possess a good track record and reputation i.e. meet the “fit and proper” test.
• Be adequately regulated and supervised by its home supervisory authority for AML and CFT.

Admission Criteria

MAS assesses the applications holistically and issues licenses on a case-by-case basis. When deciding, the authorities takes into consideration factors such as:

• Fitness and propriety of the applicant; and in the case of a company, partnership or limited liability partnership, the fitness and propriety of its management;
• Financial condition of the applicant, and in the case where the applicant is a company, partnership or limited liability partnership, its track record and financial performance in previous years;
• Ownership and shareholding structure;
• Qualifications and experience, particularly in operating a money-changing business and in complying with the anti-money laundering and countering the financing of terrorism regulations;
• Business plan and model, including AML and CFT policies and procedures;
• Whether the public interest will be served by granting a licence.

Application Fee and Payment Method

All applicants are required to pay a non-refundable application fee of S$500 and an annual licence fee of S$1,500.

Processing Time

As each application will be evaluated on a case-by-case basis, processing time depends on the circumstances of each application and the completeness of the information submitted. All applications are processed promptly.

Standard payment licensed institutions may provide any combination of the seven defined payment services as long as the volume is below the thresholds as defined in the Act. In summary, these thresholds are:

• S$3 million in monthly transactions for any payment service (other than e-money account issuance and money-changing services);
• S$6 million in monthly transactions for two or more payment services (other than e-money account issuance and money-changing services);
• S$5 million of daily outstanding e-money.

Note that entities that provide payment services beyond the specified thresholds, must acquire a Major Payment Institution Licence.

Who Can Apply

The MAS has specified the following requirements for applicants:

• The applicant must be a Singapore-incorporated company or a foreign corporation registered in Singapore;
• The applicant must have a permanent place of business or registered office;
• The applicant must have minimum base capital of S$100,000;
• The applicant's board of directors should have either:
  • At least 1 executive director who is a Singapore citizen or Singapore permanent resident, or
    
  • At least 1 non-executive director who is a Singapore citizen or Singapore permanent resident and at least 1 executive director who is a Singapore Employment Pass holder.

Admission Criteria

When assessing an application, MAS takes into consideration factors such as:

• Fitness and propriety of the controllers and directors;
• Governance structure;
• Qualifications and experience, particularly in operating a payment services business and compliance with regulatory requirements;
• Financial condition and track record;
• Business plan and model, including operational readiness;
• Ability to comply with obligations under the PS Act, including compliance, technology risk management, and audit arrangements;
• Regulatory status in other jurisdictions, where applicable;
• For applicants with a holding company, commitment to conducting operations in Singapore;
• Whether the public interest will be served by granting a licence.

Licence Fee

Standard payment institutions are required to pay an annual licence fee depending on the payment services they are licensed to conduct. The fees are prescribed in the law and are, on average, S$5,000.

The Major Payment Institution Licence is the most comprehensive license. A license holder can provide any combination of the seven defined payment services without being subject to any constraints.

Who Can Apply

The MAS’s criteria for applicants are as follows:

• The applicant must be a Singapore-incorporated company or a foreign corporation registered in Singapore;
• The applicant must have a permanent place of business or registered office in Singapore;
• Minimum base capital of the applicant must be S$250,000;
• The applicant's board of directors should have either:
  • at least 1 executive director who is a Singapore citizen or Singapore permanent resident, or
    
  • at least 1 non-executive director who is a Singapore citizen or Singapore permanent resident and at least 1 executive director who is a Singapore Employment Pass holder.

Admission Criteria

When assessing an application, MAS will take into consideration the same factors as it does for a Standard Payment Institution License, including fitness and propriety of the controllers and directors, governance structure, financial condition, and track record, etc. MAS considers each application on its own merits and may take into account other factors on a case-by-case basis.

Licence Fee

Major payment institutions are required to pay an annual licence fee, the applicable amount depending on the payment services they are licensed to conduct. The fees are prescribed in the law and are, on average, S$10,000.

Regulations set out in the PS Act are designed to mitigate four key risks that are common across most payment services. They are as follows:

1. User protection. The new law requires major payment institutions to protect customer funds from loss through the institutions’ insolvency by using any of the following means:

• An undertaking or guarantee by any bank or other prescribed financial institution in Singapore to be fully liable to the customer for such monies;
• A deposit in a trust account; or
• Protecting in such other manner as may be decided by MAS.

2. AML and CFT. Payment services may be used for money laundering or terrorism financing purposes. The appropriate AML or CFT requirements may be imposed by MAS on relevant licensees through Notices issued under the MAS Act. Low-risk transactions are exempted from AML and CFT requirements.

3. Interoperability. The PS Act gives MAS formal powers to ensure interoperability of payment solutions, in the interests of consumers and market development. There are plans to adopt a common standard to make widely used payment acceptance methods interoperable.

4. Technology risk management. The new law empowers MAS to impose technology risk-management requirements on all licensees, such as cyber-security risk management requirements. Payment service businesses must ensure that there is adequate risk governance and implementation of mitigation strategies. Special attention must be paid to areas such as user authentication, data loss protection, and cyber-attack prevention and detection.