September 24, 2019

The Financial Services sector in Singapore is all set for an exciting times ahead.  Seen in a holistic manner, some of the recent initiatives spelt out in this Trendletter, Monetary Authority of Singapore (MAS) is not only raising the bar on Financial regulations in the Jurisdiction, but also focused on keeping a healthy competition amongst the many players by streamlining service offering as well as exploring ways to extend financial services to untapped segments.

Covered below are recent announcement by MAS on inviting applications for Digital Banking Licenses and revamping of the Payment Services.  The initiatives have already set pace for possible collaboration between prospective new entrants including players from technology, e-commerce business, non-banking players as well as traditional lenders.  It is important to note that the Digital Banks, while do not have physical presence and branches, are subjected to the same regulatory requirements as a tranditional banking player including aspects relating to fit and proper criteria, technology risk management, money laundering and terrorism financing.

Digital Banking Licenses

Further to MAS announcement on 28 June 2019 about its decision to issue up to two digital full bank (DFB) licences and three digital wholesale bank (DWB) licences, submission of applications from interested parties started in Aug 2019.

Applications for full-bank licences are open to companies headquartered in and controlled by Singaporeans, while foreign firms can apply if they form a joint venture with a Singapore firm.  A digital wholesale bank applicant can be controlled by Singaporeans or foreign entities.

While the applications can be submitted till 31 Dec 2019, successful applicants will be known by mid-2020 and expected to start operation in 12 months time.

The authority has provided additional clarity and laid down additional rules.  This includes a prospective applicant:

  • Having a track record of three or more years operating a business in the technology or e-commerce field;
  • Elucidating their case on the value proposition;
  • Articulating its growth prospects; and
  • Ability to manage a “prudent and sustainable” digital banking business.

MAS announcement is available in this URL.

Payment Services Act 2019

The Government of Singapore passed a Payment Services Bill (PSB) in the Parliament on 14 January 2019.  It is an Act to provide for the licensing and regulation of payment service providers, the oversight of payment systems, and connected matters.  The intention is to repeal the Payment Systems (Oversight) Act (Cap. 222A) (“PS(O)A”) and the Money-Changing and Remittance Businesses Act (Cap. 187) (“MCRBA”); thus, streamlining the regulation of payment services under a single legislative framework. PSB is targeted to commence in January 2020.


The Bill focuses on seven retail payment activities provided by service providers that deal directly with consumers or merchants.

  1. Account issuance: the service of issuing a payment account to any person in Singapore or any service relating to any operations required for operating a payment account;
  2. Domestic money transfers: accepting money for the purposes of executing or arranging for the execution of a payment transaction from or through a payment account or a direct debit or credit transfer through a payment account or a transfer to another person’s payment account, in each case between a payer and a payee in Singapore;
  3. Cross border money transfers: any service of accepting money in Singapore, whether as principal or agent, for the purpose of transmitting, or arranging for the transmission of, the money to any person outside Singapore or service of receiving any money from outside Singapore for, or arranging for the receipt of any money from outside Singapore by, any person in Singapore;
  4. Merchant acquisition: Service of accepting and processing a payment transaction for a merchant under a contract between the provider of the service and the merchant, which results in a transfer of money to the merchant pursuant to the payment transaction, regardless, whether the service provider holds or possesses the money;
  5. E-money issuance: issuing e‑money to any person for the purpose of allowing a person to make payment transactions;
  6. Digital payment token: dealing in digital payment tokens or facilitating the exchange of digital payment tokens.
  7. Money-changing: buying or selling of foreign currency notes.

Under the Bill, the following 3 categories of licences can be applied and a licensee shall only conduct the payment services that has been approved by the authority in the licence. Any intended change in its services, will require further approval from MAS.

  1. Money‑changing licence: No minimum capital requirement;
  2. Standard payment institution licence: Require a minimum capital requirement of S$100,000; and
  3. Major payment institution licence: Requirement a minimum capital requirement of S$250,000.

Entities exempted from the requirement to have a licence to carry on the business of providing any payment service are:

  1. Bank licensed under the Banking Act;
  2. Merchant bank approved as a financial institution under the Monetary Authority of Singapore Act;
  3. Finance company licensed under the Finance Companies Act;
  4. Person licensed to carry on the business of issuing credit cards or charge cards in Singapore under section 57B of the Banking Act;
  5. Other person or class of persons that may be prescribed.

The full statutes can be read from this URL.

Monetary Authority of Singapore (MAS): Consultation Paper on Proposed Payment Services Notices and Guidelines

 In continuation to the above, MAS has closed its consultation paper on notices and guidelines applicable to entities regulated under the Payment Services Act 2019, to effect the objectives of the Act. To effect the objectives of the PS Act, MAS intends to prescribe or issue the following instruments:

  1. regulations and one order under the PS Act;
  2. anti-money laundering and countering the financing of terrorism (“AML/CFT”) notices under the MAS Act;
  3. notices under the PS Act; and
  4. guidelines

Further to the consultation papers issued in April and June on items (i) and (ii) above, the latest consultation paper sought views on items (iii) and (iv).

While awaiting MAS response to the feedback received, the consultation paper can be accessed from this URL.