PSA Licenses

Written by Ian Tan Zhi Yan

In January 2020, the Payment Services Act (“PSA”) was introduced to ameliorate the regulatory framework governing payment services in Singapore. The licensing regime under the fairly recent PSA comes in three broad strokes and provides for three kinds of licenses under its ambit. These three licenses are: –

  1. Money Changing License (“MCL”) – required for money changing services. MCLs are required by businesses to conduct, solely, the buying or selling foreign currency notes;
  2. Standard Payment Institution (“SPI”) License – required to carry out payment services subject to certain thresholds; and
  3. Major Payment Institutions (“MPI”) License – required to carry out payment services without threshold restrictions.

The PSA was also introduced to broaden the regulatory ambit of the Monetary Authority of Singapore (“MAS”) as it addressed and included new payments services activity such as Digital Payment Tokens (“DPT”) (cryptocurrency). To align the PSA with the standards adopted by the Financial Action Task Force (“FATF”) in June 2019 addressing money laundering and terrorist financing risks posed by the rise of virtual assets, the recent Payment Services (Amendment) Bill (“Bill”) was introduced. The Bill, adopted in January 2021, further added to Singapore’s payment services regulatory framework, introducing changes to the PSA in implementing the enhanced international standards adopted by the FATF in June 2019.

Currently under the PSA, the following services are addressed under its ambit: –

  1. Account issuance services – services where a payment account is issued or any service relating to any operation required for operating a payment account, eg. an e-wallet or stored value cards.
  2. Domestic money transfer services – providing local funds transfer services in Singapore.
  3. Cross-border money transfer services – providing inbound and outbound remittance services
  4. Merchant acquisition services – providing merchant acquisition services in Singapore. Merchant acquisition services is where the service provider processes payment transactions from and payment receipts on behalf of a merchant.
  5. E-money issuance services – issuing e-money for users to carry out transactions
  6. Digital payment token services – buying or selling DPTs or providing a platform for DPT exchanges to be carried out
  7. Money changing services – buying or selling foreign fiat currency.

When assessing if an applicant should be granted a license to conduct activity regulated under the PSA, MAS has made it clear that they would give paramount consideration to the ability of the applicant to comply with obligations and requirements under the PSA. Namely, MAS would consider, among others: –

  1. The applicant’s corporate governance and ownership structure;
  2. Compliance and risk management framework of the applicant;
  3. Ability of key individuals of the Applicant to fulfil the fit and proper criteria;
  4. Applicant’s Anti-Money Laundering and Counter Financing of Terrorism framework; and
  5. Audit arrangements; and
  6. Base capital requirements.

If you require advise or guidance with a payment license application or wish to find out more about payment services licenses, please do not hesitate to contact us.

The information provided herein is for informational purposes only and should not be construed as professional or legal advice. While Credence Consulting Pte. Ltd. (Credence) believes that its sources are reliable, we make no representation or warranty as to the accuracy of the contents. You should contact your legal counsel to obtain advice with respect to any particular matter raised. The opinions expressed here or through our website are the opinions of the individual author only and are not legally binding, and may not reflect the opinions of Credence or any individual partner or director.

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