Digital Payment Service Providers to Be Streamlined
Singapore is moving to streamline all digital payment service providers who currently fall outside the regulatory schemes. These providers are set to be licensed under a new regime, under the new proposed Payment Services Bill.
In a bid to safeguard consumers’ money, boost cyber-security measures and counter terrorism financing, the Bill will broaden the regulatory regime for better regulation.
MAS stated that the Bill will comprise of two parallel regulatory frameworks. The first framework will allow MAS to name and regulate all payment systems, which are crucial for financial stability, while the second framework involves a mandatory licensing regime for all payment service providers. The second framework will depend upon the activity that the providers are involved in, and providers will generally need only one license to conduct one or more business activities. The new Bill is also expected to affect payment tokens and electronic wallets, such as Bitcoin, GrabPay and Ethereum.
New Bill Expected to Help Streamline Regulation of Payment Service
The new Bill is expected to help streamline the regulation of payment services, and bring them under a single activity-based legislation. The proposed bill is also expected give MAS authority to oversee all payment service providers which are currently not regulated under the Payment Systems (Oversight) Act or the Money-Changing and Remittance Business Act. Currently in Singapore, only two legislations regulate payment services, and these are governed by the likes of ez-link, Nets CashCard and remittances. The newer payment services and methods, such as digital payments for example, which have grown in popularity do not fit in with the existing rules.
With the proposed new Bill, the Payment Systems (Oversight) Act or the Money-Changing and Remittance Business Act are expected to be repealed when the Bill comes into effect at the end of next year. Among the activities which will be regulated by the Bill include the acquisition of merchants that will use these payment providing platforms, issuing of accounts and electronic money, transfer of money in and out of Singapore and the exchange of digital payment tokens activity for tokens like Bitcoin.
Payment service providers must apply for either one of three licenses if they wish to conduct these activities. The licenses include a money changer license, a major payment institution license or a standard payment institution license. The activities above have different risks involved, and MAS will be responsible for regulating these risks based on the activity.
Money Changers will be Regulated
All standard payment institutions and money changers will be regulated primarily for terrorism-financing risks and money laundering activity. Currently, money changers are licensed under the Money-Changing and Remittance Business Act, and once the new Bill is enforced, they will still be able to change money. Major payment institutions will face a more comprehensive regulation.
All payment institutions can apply to either be a standard or major payment institution, and this would depend on the volume of transactions they conduct. Each standard payment institution will not be allowed to transact more than $3 million a month, and cannot hold electronic money floats of more than $5 million. Any institution who deals with more than those amounts must apply to be a major payment institution.