What Does the New Payment Services Act Mean for Singapore?by Fintechnews Singapore January 15, 2019
The Payment Services Bill which has recently been passed into law by the Parliament is part of the Monetary Authority of Singapore’s bid to create a regulatory framework that is more conducive for innovation in payment services.
This follows their earlier public consultation which received quite a number of response, to which the regulator said they have considered the feedback carefully, and will incorporate it where they agree.
Singapore’s Payment Services Bill will consolidate existing regulations
The Bill proposes to consolidate and replace The Money-Changing and Remittance Business Act (Cap. 187) and the Payments Systems (Oversight) Act (Cap.222A).
The proposed bill will expand the scope of regulated activities beyond stored value facilities (SVF), remittance and money changing services to include payment account issuance, domestic money transfer, and merchant acquisition services.
By expanding the payment services regulatory scope MAS will also be able to impose user protection across a wider range of payment activities.
Shifting to more risk-based licensing model for Payments Institutions
The Payments Service Bill proposes a dual-track regulatory framework one intended for major payment institutions while the other is intended for smaller players.
Mr. Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS elaborated on the nature of this when he responded to a question from Parliament,
“The threshold of e-money that will be protected under the PSB will be lowered from S$30 million to S$5 million. This means that any e-money held by a payment institution will be wholly safeguarded if the average daily float exceeds S$5 million.
If the average daily float does not exceed S$5 million, the safeguarding measures will not apply, provided the payment institution makes appropriate disclosures to consumers
This shift means smaller payments firms will have an opportunity to grow their business without being snuffed out by over-regulation and the requirement to disclose the risk to consumers means users will also be given the choice of using services from them if it suits their risk profile.
However, whether the majority of users will be able to sufficiently understand the full extent of risks the will be exposing themselves to remains to be seen especially when most terms and conditions are laid out it difficult to understand legal jargon.
During the second hearing, Minister Ong Ye Kung stated that the act will provide MAS with formal powers to pursue several intended outcomes. One of which is to ensure that payment system operators allow third party access to any system it operates without discrimination.
He added that the institution must also participate in a common platform to ensure interoperability of payment accounts. Lastly, the new act intends to have all widely-used payment acceptance methods interoperable.
Featured Image Credit: Edited from Wikimedia Commons
Editor’s Note: The parliament has passed this bill into a law effective 14 January 2019. This article was originally published on 20th November 2018 and update on 15th January to reflect recent statements made in Parliament