January 2020 date set for new payment laws in Singapore

Out-Law News | 06 Dec 2019 | 10:41 am | 2 min. read

Singapore's new Payment Services Act will begin to apply from 28 January 2020, though a number of transitional arrangements are in place.

The legislation was finalised earlier this year, but the date of commencement was only confirmed in an edition of the Government Gazette published on 5 December.

The new Payment Services Act (PSA) streamlines the regulation of payment services in Singapore. Currently, payment services in Singapore are regulated under the Payment System (Oversight) Act (PSOA) and Money-Changing and Remittance Business Act (MCRBA).

Under the new framework, businesses wishing to provide payment services in Singapore will need to hold at least one of three types of licences – a money-changing licence; a standard payment institution licence, or a major payment institution licence.

Payments law expert Bernice Tian of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said that firms which already hold a licence to operate under either the PSOA or MCRBA will be deemed to have been granted a licence under the new PSA in respect of those activities. However, she said that if those business need to vary their licence, for example because they carry out other activities that now fall subject to regulation and licensing under the PSA, then there is a grace period during which they will be able to apply to vary their licence.

A grace period of 12 months will also apply before the licensing obligations take effect for businesses that are not currently licensed for providing payment services in Singapore but which carry out activities that will fall subject to regulation and licensing under the new PSA. The grace period is only six months for providers of digital payment token services.

Tian said that all businesses that fall subject to the new framework face duties to notify the Monetary Authority of Singapore (MAS).

"Regardless of the nature of the business, all entities must notify MAS within 30 days from 28 January 2020 of the date on which they commenced their business," Tian said. "Further details on the other requirements for the notification will be put up on MAS’ website in due course."

All licensees must have a permanent place of business, or registered office in Singapore and require approval from the MAS in relation to senior director appointments and major changes to shareholdings, and will also be required to notify MAS of certain events, such as legal proceedings, irregularity or change in operations and provide information and reports to MAS upon notice.

However, only major payment institution licensees will be obliged to provide security to MAS for the performance of obligations to end users, and to safeguard moneys received from end users.

Bryan Tan, also of Pinsent Masons MPillay, has previously said that the PSA reflects "the innovation being seen in the payments market in the digital age and the need to update rules and regulations to account for that". He also described the new Act as a "hotly anticipated piece of legislation given the importance of fintech, specifically digital tokens, e-wallets and e-payments".