Following a public consultation on the Payment Services Bill (PSB) in November 2017, the PSB was introduced in Parliament on 19 November 2018. The Minister for Education, Ong Ye Kung, on behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister-in-charge of the Monetary Authority of Singapore (MAS), has moved the PSB for First Reading in Parliament.
Where we earlier issued an alert on The Proposed Payment Services Bill and How It Might Affect You, we are now pleased to update you on the changes proposed by MAS after considering consultation feedback.
For your ease of reference, we have attached the original tables and summaries below and highlighted the updates in red.
Background and summary
The PBS addresses the following 7 types of payment services:
- account issuance service;
- domestic money transfer service;
- cross border money transfer service;
- merchant acquisition services;
- e-money issuance service;
- digital payment token service; and
- money-changing service.
The PBS empowers MAS to regulate each of the above payment services for the following key risks and concerns:
- money-laundering and terrorism financing (ML/TF);
- loss of funds owed to consumers or merchants due to insolvency;
- fragmentation and limitations to interoperability; and
- technology and cyber risks
For more details on the version of the PSB released during the consultation process, please refer to our earlier Client Alert: MAS Consults on Proposed Payment Services Bill.
As was proposed in the consultation paper, the PSB will:
- combine regulations over various types of payment services currently in the Payment Systems (Oversight) Act (PSOA) and the Money-Changing and Remittance Businesses Act (MCRBA) ;
- comprise two parallel regulatory frameworks. :
- Designation Framework for Significant Payment Systems: to regulate operators, settlement institutions and participants of these designated payment systems for financial stability reasons as well as for efficiency reasons.
- Licensing Framework for Payment Service Providers: to regulate the above 7 types of payment services and require providers of such payment services to hold a PSB licence, appropriately calibrated according to the risks that specific payment services pose for different business models, and this facilitates innovation.
- contain Key Risk Mitigating Provisions such as:
- safeguarding customer monies from its insolvency;
- interoperability powers to allow third-party access; and
- MAS powers to impose technology risk and cyber security risk management requirements
Please note that MAS has also issued the E-Payments User Protection Guidelines, which complement the PSB and existing regulations on banking services, to take effect from 31 January 2019.