As 2019 draws to a close, the Monetary Authority of Singapore (MAS) has been busy putting the finishing touches on its new regulatory framework for payment services. The Payment Services Act 2019 (PS Act) will commence on 28 January 2020, changing the payment services landscape in Singapore.

In particular, payment service providers will only need one licence to conduct specified payment services, and MAS’ regulatory ambit will be extended to also cover digital payment token (DPT) services (“dealing in DPT”, i.e. buying or selling DPT such as Bitcoin, and/or “facilitating the exchange of DPT”, i.e. establishing or operating a DPT exchange) and merchant acquisition services.

Our latest update on the new payment services regulatory framework is set out below.

Existing payment service providers to notify MAS

MAS has published the Notification Form for the Purpose of Exemption for Holding a Licence under the Payment Services Act for the Specified Period (Notification Form) for persons who, before the commencement date of the PS Act, carried on an account issuance service, domestic money transfer service, merchant acquisition service, e-money issuance service and/or DPT service (specific payment services), to notify MAS of the date on which they commenced the business of providing the specific payment services.
Notifications will be accepted via the online version of the Notification Form on MAS’ website between 28 January 2020 and 27 February 2020 (inclusive).

Licence exemption for specified period

Persons who make a successful notification per the above will be exempt from having to apply for and hold a licence with respect to the specific payment services for the specified period (six months from 28 January 2020 for providers of a DPT service and 12 months from 28 January 2020 for the other relevant payment services).

Licence application

Among other related Forms, MAS has issued Form 1 – Application for a Payment Service Provider Licence. Entities will need to complete the online version of this Form on MAS’ website after 28 January 2020 to apply for a payment service provider licence.

To assist, MAS has also issued the Guidelines on Licensing for Payment Service Providers, which set out the eligibility criteria and application procedures for payment service providers under the PS Act.

Regulations and Notices

In addition to the above, the following Regulations in relation to the PS Act have been issued by MAS:

MAS has also issued various Notices, which impose legally binding requirements on entities regulated under the new PS Act, including:

  • Notice PSN01 – Prevention of Money Laundering and Countering the Financing of Terrorism – Specified Payment Services (i.e. account issuance services and e-money issuance services) (note the exemption under paragraph 3.2(a) for an account issuance service that meets certain low risk criteria)
  • Notice PSN01A – Notice on Prevention of Money Laundering and Countering the Financing of Terrorism – Persons Providing Account Issuances Services who are Exempted under the Payment Services (Exemption for Specified Period) Regulations 2019 (this Notice sets out AML and CFT requirements to facilitate the transition of existing stored value facility holders)
  • Notice PSN02 – Prevention of Money Laundering and Countering the Financing of Terrorism – Digital Payment Token Service
  • Notice PSN03 – Notice on Reporting of Suspicious Activities and Incidents of Fraud
  • Notice PSN04 – Notice on Submission of Regulatory Returns (this Notice sets out the periodic regulatory reporting of information related to licensees’ payment services)
  • Notice PSN05 – Technology Risk Management (this Notice only applies to operators and settlement institutions of designated payment systems)
  • Notice PSN06 – Notice on Cyber Hygiene
  • Notice PSN07 – Notice on Conduct (this Notice mostly relates to post-licence matters such as recording transactions and issuing receipts etc)
  • Notice PSN08 – Notice on Disclosures and Communications (this Notice sets out warning statements and other disclosures to be provided to customers and potential customers)
  • Notice PSN09 – Notice on Specified Matters and Forms

Are you ready to be licenced?

Among other criteria, an applicant for a payment service provider licence will need to:

  • meet certain governance and ownership requirements
  • satisfy MAS that its sole-proprietor, partners, or directors and CEO, shareholders and employees, as well as the applicant, itself are fit and proper
  • ensure that its sole-proprietor, partners, or executive directors and CEO have sufficient experience in operating a business in the payment services industry or related areas in the financial service industry
  • satisfy MAS how it will meet the base capital requirements (S$100,000 for standard payment institutions and S$200,000 for major payment institutions (MPI))
  • if the applicant will be an MPI, provide the required security to MAS (either S$100,000 or S$200,000 depending on the value of all payment transactions accepted, processed or executed in one month)
  • have plans in place for compliance arrangements that are commensurate with the nature, scale and complexity of its business
  • have plans in place for adequate independent audit arrangements to regularly assess the adequacy and effectiveness of its procedures, controls, and its compliance with regulatory requirements
  • where required by MAS, procure a Letter of Responsibility and/or Letter of Undertaking from the applicant’s majority shareholders, parent company and/or related company

MAS will consider each application on its own merits and may take into account other factors on a case-by-case basis.

Please do contact us should you have any questions in relation to the above or require assistance with your licence application or advice on compliance with the licensing criteria.

Natalie Curtis
Natalie Curtis
Partner, Singapore
+33 1 53 57 74 04
Mark Robinson
Mark Robinson
Partner, Singapore
+65 6868 9808
Sandra Tsao
Sandra Tsao
Director
+65 6812 1353

Disclaimer

Herbert Smith Freehills LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.