Jul 05 2019 | by OrionW
On 10 April 2019, the Monetary Authority of Singapore (MAS) released a consultation paper on proposed regulations in furtherance of the Payment Services Act 2019 (PSA). For more information regarding the PSA, please refer to our Overview of Singapore’s Payment Services Act 2019.
MAS’s role under the PSA is to regulate significant payment systems and the provision of payment services in Singapore. To achieve the objectives of the PSA, MAS intends to prescribe three sets of regulations and one order, namely:
This article will only discuss the requirements and exemptions under the PS Regulations.
Payment Services Regulations
The PS Regulations are intended to be the primary regulations governing licensees and other regulated persons under the PSA, covering the requirements for licensees and designated payment system (DPS) entities and exemptions from certain PSA provisions.
Requirements for Licensees
Apart from general procedural requirements such as the method of applying for licences, forms to be submitted, submission deadlines and fees, the key provisions of the PS Regulations applicable to licensees are as follows:
MAS proposes that the licence of a payment service provider (Provider) will lapse if the Provider does not begin providing at least one of its licensed services within six months from the grant of its licence or it ceases providing all its licensed services for six consecutive months. MAS will also implement a licence variation process for changing licence class or the types of payment services covered under an existing licence. As a general guide, MAS’s approval is required to vary any licence.
The PSA prohibits solicitation in Singapore for payment services in or outside Singapore by a person who is not a licensee or exempt Provider or a person (including a licensee or exempt Provider) acting on behalf of an overseas person who is not a licensee or exempt Provider.
The PS Regulations will set out the factors in determining when solicitation is made in Singapore, including, amongst others, whether the offer, invitation or advertisement:
Residency Requirement for Executive Directors
The PSA requires applicants for a standard or major payment institution licence to have at least one executive director who is a Singapore Citizen or Permanent Resident or who satisfies other prescribed conditions. To allow both local and foreign incorporated companies to provide payment services in Singapore, MAS proposes to allow employment pass holders to act as an executive director, provided that the applicant has at all times at least one director who is a Singapore Citizen or Permanent Resident.
MAS proposed the following minimum initial and ongoing financial requirements for standard and major payment institutions:
Standard Payment Institution
Base capital of S$100,000
Net head office funds of S$100,000
Major Payment Institution
Base capital of S$250,000
Net head office funds of S$250,000
Safeguarding Requirements and Security Deposits
The PSA requires major payment institutions to safeguard relevant customer monies, including by obtaining undertakings or guarantees from, or by depositing the relevant monies into a trust account with, safeguarding institutions. To facilitate compliance with this requirement, the PS Regulations provide that licensed merchant banks or finance companies can also be safeguarding institutions. In each case, the licensee must satisfy itself of the suitability of the safeguarding institution both at the time of issuance of the undertaking or guarantee or opening of the trust account, and periodically thereafter. Where the safeguarding requirement is met by depositing money into a trust account, the licensee may not commingle customer monies with other monies. If the licensee deals with foreign currency, the licensee may safeguard the relevant monies in the same foreign currency or in Singapore Dollars based on the conversion method to be prescribed by MAS.
The PS Regulations also prescribes the required security deposit amount for major payment institutions, to act as a small buffer for the protection of customer monies:
Requirements for DPS entities
The requirements for DPS entities under the PS Regulations are similar to those currently imposed on DPS operators, settlement institutions and participants under the existing Payment Systems (Oversight) Act. The requirements generally include providing MAS information, submitting periodic reports, obtaining MAS approval for appointments of CEO and directors of DPS operators, business continuity requirements and grounds for determining a failure by the CEO or directors of DPS operators and settlement institutions to discharge their duties or functions.
The PS Regulations also include exemptions from certain PSA provisions, such as:
The comment period for this consultation ended on 10 May 2019. Final versions of the regulations are expected to be issued when the PSA is made effective in January 2020.
 MAS proposed to require a minimum base capital instead of a minimum paid-up capital as the former factors in losses such as operational losses or dividend payouts. This would ensure that Providers have sufficient funds during economically-difficult periods.