SINGAPORE – Digital payment service providers that are outside the current regulatory scheme can expect to be licensed under the new regime proposed on Monday (11/19) in Parliament.
The Payment Services Bill will expand the regulatory regime in a step to better protect consumer money, fight terrorism funding and improve cyber security measures. This is expected to affect electronic wallets and digital payment tokens such as GrabPay, Bitcoin, and Ethereum.
As stated by Education Minister Ong Ye Kung, who is also on the board of the Monetary Authority of Singapore (MAS), the bill will bring payment service providers that are not currently regulated by the Act of Payment (Supervision) Act (PS (O)) Money and Remittance Business (MCRBA) under the control of MAS.
At present, two parts of legislation govern Singapore payment services and they manage stored value facilities such as EZ-Link and Nets CashCard and remittances.
But newer payment services and methods, such as digital payment tokens, have become increasingly used well, and they do not fit the rules.
The new bill will streamline payment service regulations in a single activity-based law, and both PS (O) A and MCRBA will be revoked when the new bill comes into force at the end of next year (2019). This has been through two public consultations since August 2016.
According to MAS, the Payment Service Bill consists of two parallel regulatory frameworks.
The first is an appointment regime that allows MAS to name and regulate the payment system which is very important for financial stability, of which PS (O) A now allows MAS to do so.
The second framework is the mandatory licensing regime for payment service providers based on the activities they will undertake. They only need one license to do one or more activities.
The activities to be regulated by this bill include account and electronic money disbursements, money transfers inside and outside Singapore, the acquisition of traders who will use their platforms, money change and dealing in the exchange of digital payment instruments such as Bitcoin.
These activities have different risks, and MAS will arrange activities according to the risks.
For example, licensees who are permitted to obtain merchants must ensure that funds are protected while those who can issue accounts must protect access to funds and personal electronic wallets.
To carry out this activity, the payment service provider must submit an application to become one of the three licensees: money changers, standard payment institutions or major payment institutions.
Exchange of money and standard payment institutions will be regulated mainly for the risk of money laundering and terrorism funding while the main payment institutions will be arranged more comprehensively, according to a MAS statement on Monday.
Money changers currently licensed under the MCRBA will still only be able to change money under the new bill.
Payment service providers can submit applications to become standard or primary payment institutions, depending on the transaction volume.
Standard payment institutions are not permitted to transact more than $ 3 million per month. They also cannot hold more than $ 5 million in electronic money. Those who deal with more than that must submit an application to become the primary payment institution.
MAS will allow up to 12 months for payment service providers to comply with changes after the new law comes into force. Those who provide digital payment tokens will be given six months to comply.
Mr. Lukas May, head of banking at TransferWise, a global fintech company that specializes in international money transfers, welcomed the proposed changes, but noted: "The closure proposed in the e-wallet balance is not necessary because all customer funds must be maintained, so they not risky. "