BusinessSingapore4 things to know about the new Singapore Payment Institution License

1. MAS introduces the new Singapore Payment Institution License

Businesses are now required to apply Singapore Payment Institution License in order to carry out certain payment services. On 28 January 2020, Monetary Authority of Singapore (MAS) announced the introduction of Singapore Payment Services Act with the aim of enhancing regulatory framework for payment services in Singapore. The main goal is to promote higher confidence in overall use of electronic payments while protecting the safety of consumers.

There are currently two types of Singapore Payment Institution Licenses: Standard Payment Institution License and Major Payment Institution License.

In the past, Singapore companies can conduct Stored Value Facility (SVF) and money remittance businesses while being license exempt. With the new regulations, it is mandatory for payment services businesses to attain the Payment Institution License. Existing Singapore SVF companies or money remittance companies will be able to apply for a one-year grace period from MAS to meet the additional requirements.

Failure to comply with the above will result in the individual being subject to a fine not exceeding SG$125,000 or imprisonment not exceeding 3 years or both.

New guidelines to be issued by Monetary Authority of Singapore

PSNO1: Notice to payment services providers (specified payment services) on prevention of money laundering and countering the financing of
terrorism 

PSNO1A: Notice on AML/CFT requirements to facilitate transition of existing stored value facility holders

PSN02: Notice to payment services providers (digital payment token service) on prevention of money laundering and countering the financing of
terrorism

PSN03: Notice on reporting of suspicious activities and incidents of fraud

PSN04: Notice on submission of regulatory returns

PSN04A: Notice on submission of statement of transactions and profit/loss

PSN05: Notice on technology risk management

PSN06: Notice on cyber hygiene

PSN07: Notice on conduct

PSN08: Notice on disclosures and communications

PSN09: Notice on administrative matters

FSG-G01: Guidelines on fit and proper criteria

2. Business activities allowed

Under the Singapore Payment Services Act, your business is required to secure Payment Institution License in order to provide payment services below. In Singapore, the Standard Payment Institution License is the most common and has less mandatory requirements as compared to the Major Payment Institution License.

Payment Institution License

A person must have in force a standard payment institution licence to be entitled to carry on a business of —

• providing one of the following payment services:

(i)            an account issuance service;

(ii)           a domestic money transfer service;

(iii)          a cross‑border money transfer service;

(iv)          a merchant acquisition service;

(v)           an e‑money issuance service;

(vi)          a digital payment token service; or

• providing 2 or more of the following payment services:

(i)            an account issuance service;

(ii)           a domestic money transfer service;

(iii)          a cross‑border money transfer service;

(iv)          a merchant acquisition service;

(v)           an e‑money issuance service;

(vi)          a digital payment token service;

(vii)         a money‑changing service.

What types of payment services are included in the new Singapore Payment License?

Account issuance service: Payment services that issue payment accounts to users. Some examples include e-wallets or a credit card that is not issued by banks.

Domestic money transfer service: Payment services that allow users to conduct money remittance locally. Some examples include payment gateway services and payment kiosks.

Cross-border money transfer service: Payment services that allow users to conduct international money remittance in and out of Singapore.

Merchant acquisition service: Payment services which allows users to accept and process payments for merchants. Some examples include point-of-sale terminals or online payment gateways.

E-money issuance service: Payment services which allows users to make payments to merchants or transfer funds to other individuals.

Digital payment token services: Payment services which allows users to buy or sell cryptocurrencies. This includes cryptocurrency wallets and cryptocurrency exchanges.

Money-changing service: Payment providers that allow users to physically exchange currency notes. This includes money changers in Singapore.

Threshold

The thresholds for the Standard Payment Institution License are:

• S$3 million monthly transactions for any payment service (other than e-money account issuance and money-changing services).
• S$6 million monthly transactions for two or more payment services (other than e-money account issuance and money-changing services).
• S$5 million of daily outstanding e-money

Do note that MAS will require applicants to describe the monitoring measures that will be taken to ensure your business does not exceed these thresholds.

Major Payment Institution License

• If your business exceeds the above-mentioned threshold, you will be required to apply for a Major Payment Institution License. By applying for a Major Payment Institution License, your business will be subject to additional requirements. It is mandatory for Major Payment Institutions to maintain a security deposit with the Monetary Authority of Singapore.
• If the monthly average of payment transactions for any one payment service does not exceed S$6 million, the security deposit will be S$100,000. If your business exceeds this threshold, the security deposit will be increased to S$200,000. Applicants can choose to maintain the security deposit as a cash deposit with MAS or as a bank guarantee.
• Holders of Major Payment Institution License are subject to safeguarding of funds. This can take the form of undertaking/ guarantee or trust account.

3. Mandatory requirements of Singapore Payment Institution License

For both Payment Institution Licenses, you are required to meet the following requirements:

• The application must be submitted by a company registered in Singapore or a foreign branch registered in Singapore. See this webpage on the steps required to establish a Singapore company within 1 week.
• You are required to have either a local registered office address or a physical office.
• The minimum paid-up capital for Standard Payment Institution License is S$100,000 while that of Major Payment Institution License is S$250,000. This is also known as the base capital.
• Your board of directors should include either:
  • at least 1 executive director who is a Singapore Citizen or Singapore Permanent Resident or
  • at least 1 non-executive director who is a Singapore Citizen or Singapore Permanent Resident and at least 1 executive director who is a Singapore Employment Pass Holder.

• Appoint external auditor annually to carry out an audit of the transactions in relation to the payment services and submit the audited report to MAS.
• You are also required to prepare an array of corporate documents prior to license application submission. Some of these documents include AML/CFT policies and procedures, technology risk management policies, cyber hygiene procedures and cyber security protocols.

4. Admission criteria

Monetary Authority of Singapore (MAS) has stated that they will consider the below criteria while assessing the issuance of the Standard Payment Institution License.

• Fitness and propriety of the controllers and directors.
• Governance structure.
• Qualifications and experience, particularly in operating a payment services business and compliance with regulatory requirements.
• Financial condition and track record.
• Business plan and model, including operational readiness.
• Ability to comply with obligations under the PS Act, including compliance, technology risk management and audit arrangements.
• Regulatory status in other jurisdictions, where applicable.
• For applicants with a holding company, commitment to operations in Singapore.
• Whether the public interest will be served by granting a licence.

How to apply for Singapore Payment Institution License?

Tetra Consultants expects to register your Singapore company, open local corporate bank account and secure Standard Payment Institution License within 4 months. Contact us to find out more about how to secure Singapore Standard Payment Institution License.