New payment service legislation in Singapore: what to expect?

Today, Singapore is among the top 5 most popular financial systems in the world. In order to strengthen its status as a leading global financial center and create an innovative environment for financial technology, Singapore authorities decided to update the legislative framework on payments and payment services. On January 14, 2019, the Payment Services Act (PSA) was adopted in order to combine the regulation of services that were previously regulated separately and to ensure licensing and monitoring of payment systems in a single legislative act. The new act has not yet entered into force, but the Singapore financial regulator claims that it will enter into force by the end of 2019, along with additional legislation that will provide the basic forms, processes and procedures for applying for a license. In the meantime, financial institutions should become familiar with all the requirements and obligations in accordance with the PSA and implement the required preparation.

What payment services fall within the scope of the PSA?

PSA significantly expands the scope of regulated payment services and divides them into seven categories:

•  Issue of electronic money;
•  Opening accounts;
•  International transfers of funds;
•  Domestic money transfers;
•  Sale and purchase services;
•  Services in the field of virtual currencies;
•  Exchange services.

Types of payment licenses in Singapore under the PSA:

1. Money-Changing license

This license only gives the right to exchange money. These include exchangers that profit from the exchange of banknotes in physical currency.
If you want to carry out any combination of payment services from the above seven categories, you need to apply for a Standard payment institution license or Major payment institution license.

2. Standard payment institution license

Requirements:
The average value of the total cost of all payment transactions that have been accepted, processed or performed by the licensee for one month during the calendar year should not exceed:

•  3 million Singapore dollars (~ $ 2,171,126.49) for one payment service;
•  6 million Singapore dollars (~ $ 4342252.98 $) for two or more payment services

3. Major payment institution license

If the average total cost of all payment transactions for one month exceeds the thresholds indicated below, then you need a Major payment institution license

•  3 million Singapore dollars (~ $ 2,171,126.49) for one payment service;
•  6 million Singapore dollars (~ $ 4,342,252.98) for two or more payment services

What the SVF licensees can do?

If you are an SVF license holder, a license holder under the PS(O)A (Payment Systems (Oversight) Act) or MCRBA (Money-Changing and Remittance Businesses Act), you do not have to re-apply for PSA licenses.

You will have 6 months from the date of the new PSA entering into force, to notify Singapore's financial regulator of the specific payment services that you provide in writing form. In this case, your existing license will continue to be valid.

If you have a license under the MCRBA, it will be equated with a Money-changing license. All other licenses are equivalent to Major payment institution license.

In case where you do not yet need a license in accordance with applicable legislation (for example, PS(O)A or MCRBA), but you need a license in accordance with PSA, you will have a 6-month period from the date the PSA enters into force to apply for obtaining a license. During this period, you can continue to provide payment services.

Thus, Singapore law is in transition. According to the PSA, which was adopted, but has not yet entered into force, financial institutions providing payment services are not required to obtain a license individually for each of the payment services they offer, instead you need to obtain a license in one of three classes of licenses.

If you decide to start a FinTech business in Singapore, SBSB lawyers will be happy to help you to decide on the type of financial license, as well as prepare all the necessary documents and forms for applying to the financial regulator.

For more detailed information regarding the requirements for licensees and cost clarifications, please write to our specialists. We will be happy to answer to all of your questions!