Singapore – The Proposed Payment Services Bill And How It Might Affect You.

Activity Type

Current Regulatory Framework

New Regulatory Framelwork

Operation of Payment Systems 

e.g. receiving funds from one entity for transmission to another entity, providing merchant acquisition services, operation of payments accounts etc.

Payment system may be designated as a designated payment system under the Payment Systems (Oversight) Act (PSOA), but this is unlikely unless the system can cause significant impact to the payments or financial system of Singapore.

More commonly, such businesses are likely be licensed as remittance businesses under the Money-changing and Remittance Businesses Act (MCRBA). However, licensing requirements applies only to outbound remittance (i.e. accepting moneys in Singapore for the purposes of transmitting to persons outside Singapore) and not inbound remittance (i.e. accepting moneys outside Singapore for the purposes of transmitting to persons within Singapore).

Please also see providing merchant acquisition services, and operation of e-wallet below.

The MAS will continue to have the power to designate and regulate payment systems which can cause significant impact to the payments or financial system of Singapore, and also where it is necessary to ensure efficiency or competitiveness of the operation of payment systems in Singapore.

Remittance businesses will now be regulated as providing cross-border money transfer services. Licensing requirements will extend to both outward and inward remittance businesses, as well as domestic money transfer services i.e. accepting moneys for the purposes of executing or arranging for execution of certain payment transactions in Singapore, which will now be regulated as providing domestic money transfer services.

Please also see providing merchant acquisition services, and operation of e-wallet below.

Providing Merchant Acquisition Services 

e.g. providing point of sale terminal or online payment gateway to accept and process payments on behalf of merchant.

Merchant acquisition services per se are not regulated unless they fall within one of the other regulated activities, such as remittance business.

Such activities will now be regulated as providing merchant acquisition services i.e. contracting with a merchant to accept and process payment transactions which results in the transfer of money to the merchant. This is regardless whether the payment service provider comes into possession of money in respect of the payment transactions.

Operation of Stored Value Facility 

e.g. issuing of stored value such as gift cards, credits etc.

Operation of stored value facilities i.e. operation of facilities purchased or acquired to be used as a means of making payment for goods or services up to the amount of stored value and where payment for goods or services is made by the operator of the stored value facility rather than the user, is regulated under the PSOA.

Operators holding more than SGD 30 million in stored value and which are not single purpose stored value facilities need to obtain approval from the MAS. Other operators need to comply with certain notification requirements to the MAS, and may to comply with certain customer due diligence and anti-money laundering requirements.

Such activities will now be regulated as e-money issuance i.e. issuing electronically stored monetary value that is denominated in any currency that has been paid in advance for the purpose of making payment transactions through the use of a payment account, is accepted by a person other than the person that issues the e-money, and represents a claim on the person that issues the e-money. This does not however include deposits accepted in the course of carrying on deposit-taking business, which is separately licensable under the Banking Act.

Operation of E-Wallet 

e.g. issuing of payment accounts including accounts used to hold stored value

Operation of an e-wallet per se is not regulated unless it falls within one of the other regulated activities, such as remittance business or operation of a stored value facility.

Such activities will now be regulated as providing account issuance services i.e. issuing a payment account (which is an account used by a user for the initiation, execution or both of payment transactions), or providing services in relation to the operations required for operating a payment account.

Operation of Virtual Currencies Exchange Platform, Buying or Selling Virtual Currencies

Currently, the operation of a platform for the sale, purchase or exchange of virtual currencies, or the carrying on business in buying or selling virtual currencies are not regulated. Virtual currencies refer to any digital representation of value expressed as a unit, that is not denominated in any currency, is a medium of exchange accepted by the public or a section of the public as payment for goods or services or the discharge of debt, and can be transferred, stored or traded electronically.

However, do take note of the distinction between virtual currencies and digital coins or other virtual goods representing other underlying assets, which attract separate regulatory requirements. Our earlier client alert on initial coin offerings may be found here.

Such activities will now be regulated as providing virtual currency services, which includes dealing in virtual currency and facilitating the exchange of virtual currency.

Again, do take note that persons issuing, dealing or facilitating the exchange of digital coins or other virtual goods representing other underlying assets may continue to be subject separate regulatory requirements under other applicable laws.

Money-changing Business

The business of buying or selling foreign currency notes is licensable under the MCRBA as a money-changing business.

Such activities will continue to be regulated as providing money-changing services.