About payment services and the Payment Services Act (PS Act)
What are some of the services relating to payments that are not regulated as payment services 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.
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.
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.
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 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.
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 .
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
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
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 - Scope of E-money and Digital Payment Tokens for more information.
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.
Applying for payment service license
- 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.
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 set out under the PS Act and other relevant legislation to their business.
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.
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 and for more information about licence validity lapsing, surrender, revocation, or suspension of licence.
Would this inability to withdraw cash discourage customers from using e-wallets?
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.