Payment Services Act FAQs
The Payment Services Act (PSA) came into effect in Singapore on 28 Jan 2020. It was designed to streamline the payment services regulatory framework under a single piece of legislation.
To learn more about the Payment Services Act, browse these frequently asked questions below or get in touch with our APAC Compliance Solutions team today.
To achieve this, the Monetary Authority of Singapore (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. Please find out more details in our article:
Under the Payment Services Act, any payment service provider (PSP) that carries out specified payment activities in Singapore is required to obtain a license from the Monetary Authority of Singapore (MAS) unless exempted. The specified payment activities include account issuance services, domestic money transfer services, and merchant acquisition services, among others.
The Payment Services Act (PSA) currently regulates the following seven types of activities:
- account issuance services
- domestic money transfer services
- cross-border money transfer services
- merchant acquisition services
- eMoney issuance
- digital payment token services
- money-changing service.
Please find more details in our article:
If you conduct regulated payment services aside from money-changing, it will require a SPI or MPI licence depending on whether your current or expected business volume exceed the specified SPI thresholds.
Regardless of what licence you apply for, applicants must ensure that they meet the business needs for a reasonable period of time. For example, if you expect to exceed the specified SPI thresholds in a year, you should apply for an MPI initially, rather than a SPI licence. This is because if you exceed the threshold, you will have to apply for a license variation and this will take time, effort and additional money.
Please also note that you can only apply for one licence. You should not apply, for the same entity, an SPI licence for one activity and a MPI licence for another activity.
No – the Monetary Authority of Singapore (MAS) expects the company to be incorporated at the point of application. A company must be registered with ACRA and must meet the governance and ownership requirements in Appendix 1 of the licensing guidelines. It is not possible for MAS to process a licence application for an entity that does not exist yet. MAS advises applicants to give themselves enough time to complete this step with ACRA, particularly if internal approvals are required. Corporate Incorporations are, however, an extremely straightforward process in Singapore. We can incorporate companies within a day on receipt of KYC and other information.
MAS will access the key individual’s understanding of the Payment Services Act (PSA) and requirements in relation to their business model. They will also discuss the compliance and audit arrangements. Audit here refers to internal audit.
Apart from the admission requirements, MAS will also ask applicants on how you intend to comply with the ongoing requirements. Depending on how comprehensive the information provided is, there may be more than one round of interview. Essentially, the more complete your application is, the fewer rounds there will be.
For security deposits placed with MAS in cash, this will be kept in a bank account and applicants will not earn any interest on that cash deposit. Please find out more details in our article:
MAS is still in the process of conducting a policy review on the classification of stable coins that are not assessed as e-money and will not be able to provide additional information on this issue at this time. Applicants should conduct assessments of their product offering based on the current legislative framework. Applicants may also consider the classification of tokens in other jurisdictions they have carried out assessments in and can consider adopting similar risk-mitigating measures in their Singapore business. Tokens should be assessed individually as each token has its own unique characteristic which may affect their regulatory classification.
A payment services provider can only outsource the operational portion of the compliance work. Ultimate responsibility and accountability still rests with the key individuals of the PSP.
Learn more about our compliance outsourcing services.
It is not sufficient to simply provide a plan if the company is already operating. Applicants will be expected to conduct a EWRA and submit it as part of the application. However, if you are new to the industry and have yet to commence operations, applicants can use an expected business profile to conduct an EWRA. For example, if you expect a certain profile of customers, expect to provide certain services or expect a certain volume of transactions, you should refer to the guidelines and include all of these factors into the EWRA.
This also assists during the application interview as the MAS will ask questions on the applicant’s AML/CFT risks in relation to the business and it will be difficult to substantiate the answer if an EWRA has not been done.
Under the 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:
• less than or equal to S$3m monthly transactions for any activity type
• less than or equal to S$6m monthly transactions for 2 or more activity types
• less than or equal to 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:
• greater than S$3m monthly transactions for any activity type
• greater than S$6m monthly transactions for 2 or more activity types
• greater than S$5m of daily outstanding e-money for e-money issuance services.
Please find more details in our article:
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. It is regulated by the Monetary Authority of Singapore (MAS). It requires the preparation and submission of Form1, Form3 and other supporting documents in an application pack that needs to be submitted to MAS. Please see the article below written by our team specifically on PSA Licencing for more details:
If applicants are unsure of the process, you may engage a professional service provider such as Waystone for assistance. In most cases legal opinion are not required, the exception to this being service providers in the Digital Token space, where professional and experienced firms such as Waystone can help with the entire process.
The Monetary Authority of Singapore (MAS) has set out what they expect to see in the application guidelines. Applicants must be committed to fulfilling all the admission criteria prior to licence issuance. Except for some items that are settled in the period between the in-principal approval (IPA) and the licence issuance, or at different points in the application process, such as where a key individual has been identified but the paperwork has yet to be completed, MAS expects all criteria to be met at the point of licence application.
The Monetary Authority of Singapore (MAS) has set out what they expect to see in the application guidelines. Applicants must be committed to fulfilling all the admission criteria prior to licence issuance. Except for some items that are settled in the period between the in-principal approval (IPA) and the licence issuance, or at different points in the application process, such as where a key individual has been identified but the paperwork has yet to be completed, MAS expects all criteria to be met at the point of licence application.
All applicants who provide online financial services will be required to complete a penetration test and remediate all high risk findings prior to licence issuance. Online financial services refer to anything that has the capability to offer a financial service such as execution of payment transactions. The full definition can be found in the MAS’ Technology Risk Management (TRM) guidelines.
Please note that if an applicant plans to do a penetration test prior to licence application, the penetration test must be done within a reasonable period – within a year of licence issuance and there cannot be major system changes or updates since the last test.
This test can also be done after the In-Principle Approval (“IPA”) is granted however, all foreseeable high-risk findings must be mediated prior to licence issuance and commencement of business.
Base capital requirements should be met at the point of licence application. However, if the applicant has legitimate reasons why the entity cannot meet the requirements and have plans to raise capital (e.g. via fund raising), this needs to be elaborated on in the application.
The Monetary Authority of Singapore (MAS) will not grant a licence if the base capital requirements cannot be met. Any plans to raise funds need to be concrete and ideally already in motion. For instance, if the company intends to raise funds, it should ideally have identified investors and have a realistic short-term timeline (within 1-2 months) to complete the fund raising.
The system does not allow drafts to be saved so the form must be completed in total.
Upon submission of the form, applicants will receive an email from a Monetary Authority of Singapore (MAS) officer to acknowledge receipt of the application. Thereafter, once the submitted application forms and documents have been reviewed, MAS will arrange an application interview with the key personnel.
Please note that there is no deadline or cut-off period for the duration of the entire licensing process. Applicants can confirm with the MAS officer assigned to the case on the status of the application from time to time.
Applicants must carry out an assessment of each token that they intend to offer to determine whether it is a DPT or even a security. The PSA licence requirements pertain to a person carrying on a business of providing any type of payment service in Singapore, where carrying on a business generally includes activities that have system continuity and repetition. Where the activity is a one-off issuant, this does not constitute continuity and repetition and thus, will not fall under the licensing scope.
Digital Payment Token (DPT) providers will likely be caught under the PS Act already. The Omnibus Act is trying to capture those who are not already caught under the PS Act. This refers mainly to service providers who are incorporated in Singapore but provide their services wholly outside of Singapore.
If you have not started operations, you will not be able to start this process. If you have started operations but are not carrying out a regulated activity, you may continue as per usual if you do not require a licence. However, you will not be able to carry out any regulated activities if your application is rejected. For those who are operating under the exemption period, if your application gets rejected, you will have to cease business immediately upon rejection of the application.
Applicants can apply as many times as they wish, however it is advisable to only do so when you have re-assessed that you are ready to apply again. Trying a second time without improving your business plan or your mitigating controls will not change the end result. Too many rejections on your records does not reflect well for your entity.