Licensing Guide – Payment Services Act (PSA)
December 8, 2021
The 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.
What is a PSA License?
A PSA license authorises firms, the licensee, to provide payment services in Singapore. These firms are regulated by the Monetary Authority of Singapore (MAS).
Licensing regulatory frameworks
MAS has introduced two 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.
Activities regulated under PSA licensing
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 PSA License Class
Under the Payment Services Act (PSA), payment service providers have to be licensed under one type of licence class namely:
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.
| License Type | Description |
|---|---|
| Money-Changing License | Only able to conduct money-changing services. |
| Standard Payment Institution License | Are able to conduct multiple payment services. Subject to the following thresholds:
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| Major Payment Institution License | Are able to conduct multiple payment services. Subject to the following thresholds:
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What are the requirements for each license application under PSA?
The following table sets out the basic prerequisites for each license under the Payment Services Act:
| Money-Changing License | Standard Payment Institution License | Major Payment Institution License | |
|---|---|---|---|
| Shareholding structure |
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| Governance requirements |
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| Fit and Proper |
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| 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. | ||
| Application Fee | S$ 500 | S$ 1,000 Or the sum of the amounts below for the payment services applied for, whichever is higher. | S$ 1,500 Or the sum of the amounts below for the payment services applied for, whichever is higher. |
| Annual License Fee | S$ 1500 | S$ 5,000 Or the sum of the amounts below for the payment services applied for, whichever is higher. | S$ 10,000 Or the sum of the amounts below for the payment services applied for, whichever is higher. |
PSA License Fees
The fees payable depend on the licence type and payment services applied for and range from S$ 1, 000 to S$10,000 annually. The following table sets out the Application and Annual fees for each licence and activity type under the PSA.
| Activity Type | Standard Payment Institution License | Major Payment Institution License | ||
|---|---|---|---|---|
| Application Fee | Annual Fee | Application Fee | Annual Fee | |
| Account Issuance Service | S$ 0 | S$ 0 | S$ 0 | S$ 0 |
| Domestic money transfer service | S$ 1,000 | S$ 5,000 | S$ 1,500 | S$ 10,000 |
| Cross-border money transfer service | S$ 1,000 | S$ 5,000 | S$ 1,500 | S$ 10,000 |
| Merchant acquisition service | S$ 1,000 | S$ 5,000 | S$ 1,500 | S$ 10,000 |
| E-money issuance service | S$ 1,000 | S$ 5,000 | S$ 1,500 | S$ 10,000 |
| Digital payment token service | S$ 1,000 | S$ 5,000 | S$ 1,500 | S$ 10,000 |
| Money-changing service | S$ 500 | S$ 1,500 | S$ 500 | S$ 1,500 |
How Waystone can help
Our compliance team has a thorough understanding of the licensing criteria for PSA firms operating in Singapore and has successfully collaborated with numerous clients on license applications, guiding them through the entire process.
If you require regulatory support, please reach out to our APAC Compliance Solutions team.