This article provides an actionable roadmap for potential players looking to enter Singapore's payment services sector, including licensing criteria and eligibility requirements, supporting documents, and compliance with key post-licensing obligations.

Types of licence

A person that wishes to carry on a business of providing any type of payment service may apply to the Monetary Authority of Singapore (“MAS”) for the appropriate licence.

There are three types of licences that are provided for under the Payment Services Act 2019 (“PSA”) as follows: (a) a money-changing licence; (b) a standard payment institution (“SPI”) licence; and (c) a major payment institution (“MPI”) licence. 

A person must have in force a money-changing licence to be entitled to carry on a business of providing a money-changing service, unless the person has in force a SPI licence or MPI licence that entitles the person to carry on a business of providing that service. If a person provides money-changing service (for example, the service of buying or selling foreign currency notes), the person will have to apply for a money-changing licence.

This article focusses on the SPI and MPI licences in relation to the PSA, which would allow licence holders to carry on business of providing the following activities:

(a)     account issuance service – the service of issuing a payment account or any service relating to any operation required for operating a payment account, such as an e-wallet or a non-bank issued credit card;

(b)     domestic money transfer service – providing local funds transfer service in Singapore. This includes payment gateway services and payment kiosk services;

(c)     cross-border money transfer service – providing inbound or outbound remittance service in Singapore (i.e. providing the service of performing funds transfer from Singapore to an overseas account, or receiving funds from an overseas account in Singapore);

(d)     merchant acquisition service – providing merchant acquisition service in Singapore where the service provider processes payment transactions from the merchant and processes payment receipts on behalf of the merchant. This service typically includes providing a point-of-sale terminal or online payment gateway;

(e)    digital payment token service – buying or selling digital payment tokens (“DPTs”) (commonly known as cryptocurrencies), or providing a platform to allow persons to exchange DPTs; and

(f)      e-money issuance service – issuing e-money to allow the user to pay merchants or transfer to another individual (e.g. issuing monetary credits in e-wallets that enable users to pay for goods and services).

It would be prudent for a potential applicant to seek legal advice on its business model to assess whether any proposed payment service(s) contain overlapping elements with one or more types of regulated payment services under the PSA.

 

Threshold, Eligibility and Licensing Criteria

  SPI licence MPI licence
Threshold criteria

An applicant can apply for a SPI licence if its payment services meet the following thresholds:

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

An applicant should apply for a MPI licence if the payment services it provides exceed the specific threshold limits.

If the applicant only provides money-changing services, it should apply for a money-changing licence instead.

Under a MPI licence, an applicant can conduct multiple payment services without being subjected to the following threshold limits on transaction volume or float:

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

The applicant should apply for a MPI licence if the payment services that they provide are below the specified threshold limits.
Eligibility criteria

To be eligible to apply for an SPI or MPI licence, an applicant must meet all of the following criteria:

(a)     Be a Singapore-incorporated company or a Singapore branch of a foreign corporation.
(b)     Place of business – the applicant should have a permanent place of business or a registered office where the books and records can be securely held. At least one person must be appointed to be present at the place of business or a registered office to address any queries or complaints from consumers.
(c)     Corporate governance – the applicant should have either one executive director who is a Singapore citizen or Singapore permanent resident, or one executive director who is a Singapore employment pass holder and at least one other director who is a Singapore citizen or Singapore permanent resident.

Base Capital – the eligibility criteria between a SPI and MPI licence differ in terms of the minimum base capital requirement.

A SPI licence requires the applicant to have a minimum base capital base of S$100,000.

 A MPI licence requires the applicant to have a minimum base capital of S$250,000.
Licensing Criteria

MAS takes into consideration factors including but not limited to the following:

(a)     fitness and proprietary of applicant’s controllers and directors, in accordance with the Guidelines on Fit and Proper Criteria;
(b)     competency of key individuals;
(c)     compliance arrangements;
(d)     technology risk management;
(e)     audit arrangements;
(f)      annual audit requirements; and
(g)     Letter of Responsibility/Letter of Undertaking from the entity’s majority shareholders, parent company and related company, where appropriate.

MAS may also take into consideration the following:

(a)      applicant’s track record and financial condition, and those of the applicant’s holding company or related corporations, where applicable;
(b)      applicant’s operational readiness, including ability to comply with regulatory requirements;
(c)      applicant’s holding company’s commitment to conduct operations in Singapore;
(d)      whether the applicant, its holding company or related corporations are subject to proper supervision by a competent regulatory authority; and
(e)      whether public interest will be served by granting a licence.

As a general note, MAS considers each application on its own merits and may take into account these factors on a case-by-case basis.

The Guidelines on Licensing for Payment Services Providers issued by MAS contains further information on the eligibility criteria and application procedures for payment service providers under the PSA.


Supporting documents

Prospective applicants would have to prepare the following supporting documents to supplement their PSA licence application:

(a)        a copy of the applicant’s business profile from the Accounting and Corporate Regulatory Authority of Singapore, which should be dated within 30 days of the application date;

(b)        scanned copies of the applicant's audited financial statements and the audited consolidated financial statements of the group for the past three years, where applicable;

(c)         a copy of the applicant’s organisation chart, including the compliance function;

(d)        a copy of the applicant's shareholding chart, including all controlling interests;

(e)        the applicant's business plan that illustrates compliance with the PSA and other relevant legislation;

(f)          a legal opinion on the regulated payment services conducted given the applicant’s business model. The legal opinion should be issued by a law firm that has experience advising on the PSA and should include a detailed and comprehensive analysis of how each regulated payment service is or is not applicable to each proposed service or product;

(g)        anti-money laundering and countering financing of terrorism (“AML/CFT”) policies and procedures, enterprise-wide risk assessment and implementation plans that illustrate the applicant’s compliance with the relevant Notices on Prevention of Money Laundering and Countering the Financing of Terrorism (PSN01 and PSN02);

(h)       for new applicants applying to provide a digital payment token service, an independent external auditor’s assessment report on the new applicant’s proposed AML/CFT and consumer protection processes, policies and procedures is required. The external auditor’s independent assessment report should be submitted together with the applicant’s licence application and must have been issued and signed off by the external auditor within the last three months from the date of application submission;

(i)          if the applicant has corporate entities as shareholders: a copy of each shareholder's business profile dated within 30 days of the date of application; and

(j)          if you have individuals as shareholders: a clear copy (both front and back) of employment pass/passport of the shareholder(s), if the individual is not a Singapore citizen or permanent resident.

 

Key post-licensing obligations

After the applicant is licensed successfully, it is required to comply with all applicable requirements set out under the PSA and other relevant legislation on an ongoing basis.

Licensees should keep up to date with regulatory developments and refer to MAS website for the latest requirements. A non-exhaustive list of requirements is provided as follows:

(a)        AML/CFT requirements – a licensee must comply with the AML/CFT requirements set out in the following:

i.        Financial Services and Markets Regulations (including regulations for targeted financial sanctions);
ii.       Terrorism (Suppression of Financing) Act 2002;
iii.      Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992;
iv.      Notices on Prevention of Money Laundering and Countering the Financing of Terrorism (PSN01 and/or PSN02) including the relevant guidelines; and
v.       Notice on Reporting of Suspicious Activities & Incidents of Fraud (PSN03);

(b)        periodic returns – a licensee must submit periodic regulatory returns in relation to its payment service activities. The relevant requirements are set out in the Notice on Submission of Regulatory Returns (PSN04);

(c)         cyber hygiene – a licensee must comply with the cyber hygiene requirements as set out in the Notice on Cyber Hygiene (FSM-N14) and put in place appropriate safeguards to protect customer information;

(d)        technology risk management – licensees providing digital payment token services must comply with the Notice on Technology Risk Management (FSM-N13), with effect from 6 November 2024; All other licensees should also refer to the Guidelines on Risk Management Practices – Technology Risk for guidance on technology risk management requirements;

(e)       business conduct – a licensee must comply with business conduct requirements in the PSA, the Payment Services Regulations and the Notice on Conduct (PSN07). These obligations include safeguarding of customers’ monies, record of transactions, issuance of receipts, adhering to the prescribed time period for transmission of money, display of exchange rate and fees, and notification of normal business hours. Licensees must also ensure that they comply with all prohibitions and restrictions, including personal payment account stock and flow restrictions, as well as prohibited business activities;

(f)          disclosures and communications – a licensee must make accurate representation on the scope of its licence and provide the disclosures set out in the Notice on Disclosures and Communications (PSN08) where applicable to its business. A licensee should also ensure that customers receive timely updates regarding any material changes to the disclosures; and

(g)        annual audit requirements – a licensee must, on an annual basis, appoint an auditor to carry out an audit of its accounts and transactions, and compliance with regulations and requirements. The licensee must ensure that the auditor submits a report to MAS in the requisite Form 4.

 

Please feel free to reach out to us should you have any queries on the abovementioned subject matter.