Key Takeaways After Reading New SG Payment Services Bill
Regulator provided clear distinction between e-money (formerly stored value) and digital payments tokens.
Digital payment token:
- Expressed as a unit
- Not denominated as a currency and isn’t pegged to one
- Is / will be a medium of exchange, will be accepted as payment for goods and services OR debt service
- Is transferable, storable or tradeable electronically
E-money:
- Is denominated as a currency (or pegged to one, meaning stable coins become e-money and therefore fall under the regulatory scope!!!)
- Has been paid for in advance to enable payment transactions using a payment account
- Is accepted by someone else than the issuer
- Represents a claim on the issuer
- ISN’T a deposit
Licensing types (can be combined within one entity):
A) Payments institution license scope can include
- Money change (only if coupled with any of the below)
- Account issuance (e.g. account registration, service registration)
- Cross-border money transfer
- Merchant acquisition
- E-money issuance
- Digital payment token
B) Major payments institution license is needed if
1) Either
- $3 million SGD (or FX equivalent) transaction volume/month or higher for any individual services)
- $6 million SGD (or FX equivalent) transaction volume / month or higher for sum of 2 or more services)
2) Or
- E-money account issuance services
- Float average of $5 million SGD or more in total value in e-money over a calendar year
3) Or
- E-money issuance service
- Average total value of specified e-money issued is above $5 million SGD per day over a calendar year
License eligibility criteria for both Payments Institution types (A and B):
- Registered entity (if outside SG)
- Permanent business address in SG
- Executive director must be SG national or permanent resident
- Financial requirements satisfied
- Fit & Proper satisfied
- Public interest is served
Obligation to notify MAS of:
- Civil and criminal proceedings, in SG or anywhere else
- Any event or an operational irregularity resulting in material disruption of service
- Being or potentially becoming insolvent or unable to meet obligations
- Any disciplinary action by any supervisory authority anywhere in the world
- Changes in regulatory frameworks abroad
- Way in which customer funds are safeguarded
Within 14 days after the occurrence:
- Change of director or CEO (except when required to notify in advance)
Obligation to safeguard customer funds for major Payments Institutions (but not for smaller institution under category A)
- No later than next business day for money transfer and merchant acquisition services (from receipt to withdrawal to e-money issuance services)
- Safeguarding institution allowed (guarantees or full liability must be in place)
- Trust accounts allowed
- Customer funds cannot to be used for debt service or company liquidation
Corporate governance
- Controllership of 20% or above is subject to MAS approval process (fit & proper + public interest)
- CEO / Director appointments are subject to MAS approval process
- Company must appoint an independent auditor (yearly audit)
