Payments Service Licensing FAQs

Find out what are the frequently asked questions about payment service licensing for new or existing applicants and general public.

New Licensees

About payment services and the Payment Services Act (PS Act)

Are all services relating to payments regulated under the PS Act? If not, then why not?

What are some of the services relating to payments that are not regulated as payment services under the PS Act?
Not all services relating to payments are regulated under the PS Act.

MAS had, after careful review and consultation with the industry, applied a risk-based approach to identify payment services that pose sufficient risk to warrant regulation, and where such risks are crucial to address, in order to build a simple, secure, and accessible payments ecosystem.

The services identified are those that have the following characteristics:
  • The services have a clear payments nexus
  • The service providers process funds or acquire transactions for merchants,
  • The service providers contract or deal with the consumer or the merchant.
Service providers that process only data (e.g. payment instructions) and not money are treated as outsourcing services. For this reason, we do not require providers of payment instrument aggregation services and data communications platforms to be licensed under the PS Act. 

The PS Act also carves out from regulation some payment services that do not pose sufficient risk to warrant regulation.

The three most significant carve outs are:
  • any Payment service that is provided by any person in respect only of any limited purpose e-money
  • any Service of dealing in, or facilitating the exchange of, any limited purpose DPTs, and
  • any Payment service solely incidental to or necessary for regulated activities carried out by a regulated financial services company.
Refer to Part 1 of the First Schedule to the PS Act for services that are payment services and Part 2 of the First Schedule to the PS Act for services that are not payment services.
What are the payment services regulated under the Payment Services Act (PS Act) that require a licence?
MAS regulates 7 types of payment services under the PS Act. 

Payment service providers must hold a licence to provide these payment services in Singapore: 
  • Account issuance service.
  • Domestic money transfer service.
  • Cross-border money transfer service.
  • Merchant acquisition service.
  • Digital payment token service.
  • E-money issuance.
  • Money-changing service.

Find out about what each of these payment services entail.

Given the increase in the number of payment firms being regulated, how does MAS regulate these firms for compliance with its regulations and requirements?

MAS has put in place a robust licensing process to ensure that only firms that are fit and proper and who are able to put in place the proper safeguards and controls are allowed to operate in Singapore.

Refer to MAS' Guidelines on Fit and Proper Criteria for more information.

For licensed entities, the existing tools that MAS uses to regulate other financial institutions, such as on-site inspections and off-site reviews, continue to be used. As in other sectors, a risk-based supervision approach is applied to allocate our resources according to the risks presented.

MAS will be increasing the amount of resources dedicated to supervising this sector as a whole, and will leverage supervisory technology solutions where relevant to enhance its surveillance capabilities.

Does MAS intend to regulate loyalty programmes?

MAS does not intend for loyalty programmes that are common in the retail space to be regulated as payment services. Such programs are designed to promote the purchase of goods or use of services provided by the loyalty points issuer or any merchant specified by the loyalty points issuer.

Due to their limited use and customer reach, such programmes do not pose the same level of risks that payment services pose. Loyalty points may be “limited purpose e-money” or “limited purpose digital payment token” within the meaning of Part 3 of the PS Act .

Any payment service mentioned in Part 1 of the First Schedule to the PS Act, that is provided by any person in respect only of any limited purpose e-money, is excluded from regulation. Likewise, any service of dealing in, or facilitating the exchange of, any limited purpose (DPT), is excluded from regulation.

In assessing whether loyalty points are “limited purpose e-money” or “limited purpose digital payment token”, MAS will likely consider the following factors among others:

  • Whether the programme under which such points are issued is marketed to customers as a loyalty program or as a payment service; and 
  • Whether any part of the programme conflicts with its stated objective of promoting the purchase of goods or use of services provided by the loyalty points issuer or any merchant specified by the loyalty points issuer. 

 

For account issuance service providers

Is an electronic wallet (e-wallet) top up service considered an account issuance service?

MAS has observed that there are businesses offering e-wallet top up services. This is usually where the service provider (Business X) accepts money from a customer for the purpose of sending the money to an e-wallet operator, so that the e-wallet operator can top up the customer’s payment account.

Business X does not provide an account issuance service because it does not operate the payment account and top up the payment account. Instead, it only hands over the money to the e-wallet operator.

Business X would however be providing an account issuance service in a situation where Business X (rather than the e-wallet operator) operates the payment account and tops up the payment account. In that situation, Business X will need to hold a licence to provide an account issuance service, unless it is exempted.

 

For electronic money (e-money) issuance service providers

How is electronic money (e-money) different from deposits and digital payment tokens (DPTs)?

E-money vs DPT:
A payment account may take the form of an e-wallet which is funded with e-money. This e-money is denominated in or pegged by the issuer to a fiat currency. This is an important distinction from DPTs.

Where the monetary value of the electronically stored amount in fiat currency cannot be determined without referring to some form of market mechanism, for example through the trading of the electronically stored monetary value on an exchange, such electronically stored amount is not e-money but may be a DPT.

E-money vs Deposits:
E-money is money paid in advance under a contract for the provision of a service. E-money are not bank deposits and therefore not protected by deposit insurance. That said, MPIs are required to safeguard their e-money float. 

MAS has also issued a consultation paper on the scope of e-money and DPT. You may wish to refer to part 3 of Consultation on the Payment Services Act 2019 - Scope of E-money and Digital Payment Tokens for more information.

Why is it necessary to regulate the provision of an electronic wallet (e-wallet) as a separate activity from the issuance of e-money?
The e-wallet is a payment account from which the customer pays. A consumer purchases e-money from a business to enable him to make money transfers or purchase goods or services from participating individuals and merchants which accept such e-money.


Often, the entity operating the e-wallet also issues the e-money. However, there is also a possibility that the e-wallet is provided by an entity that is separate from the issuer of the e-money.

The service provider that provides and maintains this e-wallet performs an account issuance service, which poses all four key risks and concerns that need to be addressed:

  • Money laundering/terrorism financing (MT/FT) risks
  • Technology risk
  • User protection; and
  • Interoperability concerns.

The activity of e-money issuance however only carries user protection risks. The Payment Services Act (PS Act) obliges major payment institutions (MPIs) that issue e-money to safeguard customer money from their own insolvency.
Does the calculation of the SPI threshold in relation to e-money issuance include the value of e-money that has already been spent? How do I compute the daily average value of the e-money?
In computing whether an entity holds a daily average e-money float that exceeds the threshold of $5 million, the value of the e-money that has been spent by the payment service user is excluded. The total annual value of the e-money float is to be divided by the total number of days in a calendar year, and not only for the days when there was e-money issuance.
 

 

Applying for payment service license

What are the types of payment service provider licences I can apply for?

There are 3 types of licences that payment service providers can apply to provide payment services regulated under the Payment Services Act (PS Act):

  • Major payment institution licence.
  • Standard payment institution licence.
  • Money-changing licence.

Find out more about each licence's fees, and eligibility and assessment criteria. 

How can I apply for a payment service provider licence?
Entities applying for a payment services licence will need to prepare documents according to the application checklist.

These documents should be submitted online together with the completed Form 1 to apply for a payment service licence. Entities may refer to the Guidelines on Licensing for Payment Services Providers for further information. 
Can foreign companies apply for a licence and are the requirements the same as those for local companies?

Foreign companies can hold a licence under the Payment Services Act (PS Act) and are governed under the same regulatory framework as local companies.

  • An applicant for a licence (other than a money-changing licence) must be a company or a corporation formed or incorporated outside Singapore.
  • The applicant must also have an executive director which meets certain Singapore residency requirements.
  • A licensee must not carry on business of providing any type of payment service unless the licensee has a permanent place of business or registered office in Singapore.
  • A licensee must appoint at least one person to be present, on such days and at such hours as MAS may specify by notice in writing, at the licensee’s permanent place of business or registered office to address queries or complaints from any payment service user or customer of the licensee.
  • The licensee must also keep, or cause to be kept, at the licensee’s permanent place of business or registered office, books of all the licensee’s transactions in relation to any payment service provided by the licensee.

Find out the details on the eligibility and assessment criteria for each type of licence or refer to the Guidelines on Licensing for Payment Service Providers for more information.

Existing Licensees

Do existing licence holders under the Payment Systems (Oversight) Act (PS(O)A) and the Money-Changing and Remittance Businesses Act (MCRBA) have to re-apply for a payment services licence?
Existing licence holders under PS(O)A and MCRBA may not have to re-apply for a licence under the Payment Services Act (PS Act).

Money-changing business licence holders under the MCRBA will be deemed as money-changing licensees under the PS Act. Stored value facility (SVF) licence holders and remittance licence holders under the PS(O)A or MCRBA will be deemed as major payment institution licensees under the PS Act.

All licensees are required to put in place systems, policies and procedures, on an ongoing basis, to fulfil all applicable requirements set out under the PS Act and other relevant legislation to their business. 

What should licensees do if they wish to change their licence type, or add or remove payment services in relation to their business?
Licensees who wish to change or vary their licence must apply to MAS by submitting Form 2 online.

Licensees should ensure that they are able to comply with the requirements of any new payment service or the new licence type at the point of application. A person who does not currently hold a licence under the PS Act and intends to apply for a licence must submit an application in Form 1. Applicants who wish to change their entity type between a sole-proprietorship, partnership, or company/corporation should also apply in Form 1.
Are existing licensees required to renew their licence?
Licensees under the Payment Services Act (PS Act) will be listed on the MAS financial institution directory.

Existing licensees do not have to renew their licence once it is approved. All licences are valid until one of the following occurs:

- MAS revokes or suspends the licence;
- The licence lapses; or
- The licensee surrenders its licence.

Refer to Section 11 of the PS Act and Section 10 of the Payment Services Regulations for more information about licence validity lapsing, surrender, revocation, or suspension of licence.
What should licensees do if they wish to surrender their payment service licence?
Licensees who wish to surrender their licence should submit Form 8 to MAS. 

General Public

How will the public know which payment firms are licensees under the Payment Services Act (PS Act)?

Licencees under the PS Act will be listed on the MAS financial institution directory.

The public is encouraged to deal with financial institutions that are listed on the directory.

Electronic wallet (e-wallet) providers are prohibited from providing cash withdrawal services.

Would this inability to withdraw cash discourage customers from using e-wallets?
This restriction is in fact consistent with the objective of the Payment Services Act (PS Act) to promote greater adoption of electronic payments and lesser reliance on cash services, which are already well provided by banks.

It also preserves the privileges of MAS' free trade agreement (FTA) partners, whose banks have been accorded access to ATMs and cashback services. Moreover, it is aligned with the industry practice today, where e-wallet issuers generally do not offer cash withdrawal services to their customers. 

While customers cannot withdraw Singapore dollars, e-money issuers can work with banks to enable funds to be transferred to the customer’s bank accounts. Such bank transfers will be further facilitated in future with MAS’ initiative to allow non-bank e-money issuers to interoperate with bank accounts.

Need more help? Write to us and we will try to resolve your issue.