In 2019 the Parliament of Singapore passed a new Payment Services Act that aims to create a contemporary regulatory framework for payment service providers and payment systems in a country that is well known for providing favorable conditions for the FinTech industry.
The PS Act went into effect on 28 January 2020 and is supposed to streamline the process for licensing and operation of payment services providers in Singapore.
Regulated payment services
A major part of the Payment Services Act is devoted to the licensing of payment service providers. The bill includes seven services that require a license to be performed in Singapore. The services are, as follows:
- Account issuance services;
- Domestic money transfer services;
- Cross-border money transfer services;
- Merchant acquisition;
- Electronic money issuance;
- Digital payment token services and
- Money-changing services.
Types of licenses
For any combination of the above mentioned 7 services, a licensee must have the respective license. The only exception is the money-changing services that can be performed with a simple Money Changing License. There has been no major change regarding the regulation of this particular activity.
For the other services a payment services provider must acquire:
- A Standard Payment Institution License or
- A Major Payment Institution License
The standard license is enough for performing payment services below two specified thresholds:
- Average monthly transactions over a calendar year not exceeding S$3 million;
- Average daily E-money float over a calendar year not exceeding S$5 million.
Once any of these thresholds is reached the payment service provider must obtain the license for a major payment institution.
Requirements for licensees
In order to apply for a Standard Payment Institution License payment providers must cover the following criteria:
- A company registered in Singapore or a corporation registered outside Singapore with a permanent place of business in the country;
- An executive director who is a Singapore citizen or a Permanent resident of Singapore (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);
- The satisfaction of certain prescribed financial and operational criteria;
- Minimum base capital of S$100,000
Each license application is reviewed by the Monetary Authority of Singapore which takes into account factors like financial condition and track record of the applicant, qualification and experience, ability to comply with obligations under the PS Act, etc.
Applicants for payment institution license are required to pay a non-refundable license. The fee depends on the type of license applied for and the payment services which are to be included in the license.
A simple Money changing License costs S$500. The Standard Payment Institution license costs S$1,000 or a higher sum depending on the payment services which are to be included in the license. The maximum application fee for this type of license is S$5500. Applicants for a Major Payment Institution License must respectively pay a fee ranging from S$1500 to S$8000.
The licensee must also pay an annual license fee and the applicable fees depend on the payment services that they are licensed to conduct.
Losing the license
A licensee can lose their respective payment institution license if they:
- Do not commence business within 6 months of the grant of license;
- Cease to provide payment service for 6 months;
- Do not conduct any payment transaction for 6 months;
- No longer cover the license criteria provided for in the PS Act.