Payment Services Act (“PSA”) came into effect in Singapore on 28 January 2020 and it streamlines payment services regulatory framework under a single piece of legislation. MAS has introduced 2 parallel regulatory frameworks. The first framework is a designation regime which enables MAS to designate significant payment systems and regulate operators, settlement institutions and participants of these designated payment systems for financial stability reasons and efficiency reasons. The second framework is the licensing framework for payment service providers. The following activities are regulated under the licensing regime of PSA:
|Activity Type||Description of services||Status under PSA|
|Account issuance services||Issuing, maintaining or operating a payment account in Singapore. Examples include e-wallets or non-bank credit cards.||Newly regulated activity.|
|Domestic money transfer services||Payment transactions executed through a payment account domestically such as payment gateways services and payment kiosks services in Singapore.||Newly regulated activity.|
|Cross-border money transfer services||Services facilitating inbound and outbound money transfer, whether as principal or agent.||Previously regulated under Money-Changing and Remittance Business Act (MCRBA). Now regulated as cross-border money transfer under PSA.|
|Merchant acquisition services||Provision of point of sale terminals, or online payment gateways to accept and process payments on behalf of the merchants.||Newly regulated activity.|
|E-money issuance||Provision of electronically-stored monetary value denominated in any currency for future payments and transfers to other individuals.||Previously regulated under the Payment Systems (Oversight) Act (PSOA). Now regulated as e-money issuance under PSA.|
|Digital payment token services||Service of dealing in digital payment tokens or facilitating the exchange of digital payment tokens.||Newly regulated activity.|
|Money-changing service||Buying or selling of foreign currency notes in Singapore.||Previously regulated under MCRBA. Now regulated under PSA.|
Type of Licence Class
Under the Payment Services Act (PSA), payment service providers have to be licensed under one type of licence class namely:
- Money – Changing Licence;
- Standard Payment Institution Licence
- Major Payment Institution Licence
|Money-Changing Licence||Only able to conduct money-changing services.|
|Standard Payment Institution Licence||Are able to conduct multiple payment services. Subject to the following thresholds: ≤S$3m monthly transactions for any activity type.≤S$6m monthly transactions for 2 or more activity types. ≤S$5m of daily outstanding e-money for e-money issuance services.|
|Major Payment Institution Licence||Are able to conduct multiple payment services. Subject to the following thresholds: >S$3m monthly transactions for any activity type.>S$6m monthly transactions for 2 or more activity types.>S$5m of daily outstanding e-money for e-money issuance services.|
What are the requirements for each licence application under PSA?
The following table sets out the basic pre requisites for each licence under the Payment Services Act :
|Money-Changing Licence||Standard Payment Institution Licence||Major Payment Institution Licence|
|Shareholding structure||– Sole proprietors; or Partnership or Limited Liability Partnership; or |
– Singapore owned company; or Foreign owned company.
|Singapore owned company; orSingapore branch of a foreign incorporated company.||Singapore owned company; orSingapore branch of a foreign incorporated company.|
|Governance requirements|| – Sole proprietor – must be Singapore Citizen and at least 1 year of relevant working or business experience on full time basis;|
– Partnerships/LLP – majority must be Singapore Citizen and each partner must have at least 1 year of relevant working or business experience on full time basis;
– Singapore owned company – more than 50% shareholding must be Singapore citizens, majority directors must be Singapore citizens and each director must have minimum 1 year of relevant working or business experience on full time basis; or
– Foreign owned company – must be of significant size, if bank, must rank well in the country of incorporation, possess good track record, adequately regulated/supervised.
|At least one executive is Singapore Citizen or permanent resident; or At least one executive director is Singapore Employment Pass holder and at least one other director is Singapore citizen or permanent resident.||At least one executive is Singapore Citizen or permanent resident; or At least one executive director is Singapore Employment Pass holder and at least one other director is Singapore citizen or permanent resident.|
|Fit and Proper|| – Satisfy Guidelines on Fit and Proper Criteria, including the applicant having satisfactory financial condition;|
– Show that it is in the public interest to grant the licence; and Satisfy other requirements stipulated by MAS.
|Place of Business||Must have permanent place of business in Singapore or a registered office.|
|Base Capital Requirement||None||S$100,000||S$250,000|
|Security Deposit Requirement||None||None||S$100,000 (the average, over a calendar year, of the total value of all payment transactions in one month does not exceed S$6 million for any one payment service) S$200,000 (All other cases)|
|Compliance Arrangement||a) Commensurate with nature, scale and complexity of business.|
b) Ultimate responsibility and accountability rest with sole-proprietor, partners, or directors and CEO, and compliance officer.
c) An independent compliance function – staff who are suitably Compliance staff may perform other non-conflicting and complementary roles such as that of an in-house legal counsel.
d) Compliance support from holding company or overseas related entity – compliance support from an independent and dedicated compliance team at its holding company, or at an overseas related entity, provided that it is able to demonstrate that there is adequate oversight by the applicant’s compliance officer, sole-proprietor, partners, or directors and CEO and other senior management.
e) The applicant must also develop appropriate compliance management arrangements, including at least, the appointment of a suitably qualified compliance officer at the management level. This individual is expected to have sufficient expertise and authority to oversee the compliance function of the applicant, although he may be assisted by other staff in day-to-day.
f) If this officer has yet to be employed at the point of application, he/she must, at the minimum, have been identified at the point of application and must be employed and appointed prior to the applicant commencing business.
|Technology Risk Management / Cyber Hygiene||Applicable to all firms.|
|AML/CFT||Applicable to all firms. Low risk transactions exempted from AML/CFT requirements.|
|Control of Shareholding||MAS approval is required if any person wishes to acquire a 20% stake or more in the licensee.|
|Control of Offices||MAS approval is required if the licensee wishes to appoint a CEO or director (for companies), or partner (for partnerships).|
|Application processing time||Processing time depends on the circumstances of each application and completeness of information submitted.|
How can Argus Help?
Are you keen to apply for a Payment Services Act (PSA) licence or are looking for some additional help in that regulatory space? We are an experienced regulatory consulting firm who understands the licensing requirements for PSA firms. We have worked with a number of clients on licence application and have assisted with the entire process. We have also assisted firms with drafting policies and procedures such as Anti-Money Laundering/Countering Financing of Terrorism policies and procedures and Technology Risk Management Policy. Contact us today for an initial consultation at email@example.com
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