All businesses that carry out one or more regulated payment activities under the PS Act will require a payment service provider licence.

The Payment Services Act 2019 (No. 2 of 2019) (PS Act) came into force on 28 January 2020, repealing the Payment Systems (Oversight) Act (PSOA) and the Money-changing and Remittance Businesses Act (MCRBA). All businesses that carry out one or more regulated payment activities under the PS Act will require a payment service provider licence. Businesses providing payment services that were previously unregulated under the MCRBA and/or the PSOA will be allowed to request a temporary exemption from the Monetary Authority of Singapore (MAS).

Regulated Payment Activities

The types of payment services regulated under the PS Act are:

Account issuance services: Service of (i) issuing a payment account to any person in Singapore and/or (ii) operating a payment account (including any service that enables money to be placed or withdrawn from such account).

E-money issuance services: Service of issuing e-money to any person for the purpose of allowing a person to make payment transactions (previously regulated under the PSOA).

Domestic money transfer services: Service of accepting money for the purposes of a payment transaction between a payer in Singapore and a payee in Singapore.

Cross-border money transfer services: Service of providing (i) outbound remittance, which is accepting money in Singapore for the purpose of transmitting to any person outside Singapore (previously regulated under the MCRBA); and/or (ii) inbound remittance, which is receiving any money from outside Singapore for any person in Singapore.

Merchant acquisition services: Service of accepting and processing payment transactions for a merchant under a contractual agreement, which results in a transfer of money to the merchant regardless of whether the service provider comes into possession of the money.

Digital payment token services: Service of (i) buying and selling of digital payment tokens in exchange for money or any other digital payment tokens (i.e., digital payment token brokers/traders); or (ii) facilitating the exchange of digital payment tokens (i.e., digital payment tokens exchanges).

Money-changing services: Buying and selling of foreign currency notes (previously regulated under the MCRBA).

Types of Payment Service Provider Licences

There are three main payment service provider licences:

1. Major payment institution licence (MPIL)
2. Standard payment standard institution licence (SPIL)
3. Money-changing licence

The MPIL and SPIL are distinguished from each other based on the average monthly transaction value or the average daily e-money issued for the regulated payment service being conducted. A MPIL is required for businesses where:

• the average monthly transaction value exceeds S$3 million for one regulated payment service or S$6 million for two or more regulated payment services;
• the average daily e-money issued exceeds S$5 million for an e-money issuance service; or
• the average daily e-money stored in a payment account and/or issued exceeds S$5 million for an e-money account issuance service.

The criteria to obtain and operate under a MPIL requires a higher standard than a SPIL and may include additional obligations on the MPIL holder to safeguard customers’ monies, maintain a security deposit with MAS and meet certain compliance requirements.

Next Steps – What Should You Do?

Businesses Previously Regulated Under the MCRBA and/or the PSOA

For entities conducting businesses that were previously licensed under the MCRBA and/or the PSOA, there are transitional arrangements that may allow such entities to be grandfathered under the PS Act as major payment institution licence holders and/or money-changing licence holders.

Businesses Previously Unregulated Under the MCRBA and/or the PSOA

MAS has indicated that a temporary exemption from the licensing requirement under Section 5(1) of the PS Act would be available for entities that provide payment services that were previously unregulated under the MCRBA and/or the PSOA. Unregulated payment services include:

1. a merchant acquisition service;
2. a digital payment token service;
3. a account issuance service;
4. a cross-border money transfer service with respect to inbound remittance; and
5. an e-money issuance service with an e-money float of less than S$30 million.

To avail themselves of the temporary exemption, entities should notify MAS of the date on which they started providing the relevant specific payment service before the PS Act came into force, 28 January 2020. The period to notify MAS is from 28 January 2020 to 27 February 2020.

Upon a successful notification, such entities would be exempt from the licensing requirements for a grace period of six to 12 months, depending on the type of regulated payment service. If an entity submits an application for a payment service provider licence during the relevant grace period, the entity will be exempt from the licensing requirements under the PS Act from the date of such application until the application is withdrawn or approved or rejected by MAS.

Businesses That Have Not Commenced Any of the Regulated Payment Services

Entities that are currently not conducting a regulated payment service will not be able to avail themselves of the temporary exemption. The relevant entity will only be able to operate a business in respect of the regulated payment service after it has made a licensing application to MAS and been granted a payment service provider licence.

View from the Ground

This broad, forward-thinking legislation effectively digitally tags all forms of commercial interactions that occur and creates a digital checkpoint that ensures a minimum level of supervision and oversight that will ultimately promote a common protocol currently lacking in the global digital ecosystem. It addresses the need to be ready for a world and commercial ecosystem that is digitalising and where money and the way we use it and interact with it will be both pervasive and personal.

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For More Information

If you have any questions regarding this Alert, please contact Krishna Ramachandra, Leon Yee, any of the attorneys in the Duane Morris and Selvam Singapore office or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.