Inside this Topic Guide
The reliable and robust provision of payment services is essential to the functioning of the real economy. At their most basic, payment services are the means through which funds are transferred between consumers, businesses and financial institutions. In an increasingly digitalised world, electronic payments are becoming more prevalent whilst use of cash is on the decline. The rise of innovative payment services is being driven by technological advancements as well as by customer demand for more flexible and efficient ways of making payments. Payment systems, which are the financial market infrastructure underpinning the provision of payment services, have also become digitalised over the past few decades.
Provision of payment services is regulated in many advanced economies. As technology continues to develop and the payments landscape continues to evolve, policy makers are also considering how the regulatory framework for payment services may need to be updated to keep pace with innovation and other changes. Some areas of focus include financial exclusion risks for those unable to access digital payments easily, competition and anti-trust issues, operational resilience, cyber risks, anti-money laundering and the use of data in payments.
The payment services industry in Singapore is fast-growing, and new payment solutions are making digital payments quicker, cheaper and more convenient for consumers while also giving rise to new risks. The increasing complexity of payment service models mean that the lines between the various payment services are getting increasingly blurred. There are also concerns that payment service providers may facilitate money laundering or terrorist financing via the use of illicit cross-border transfers, anonymous cash-based payment transactions and the structuring of payment flows to avoid reporting thresholds. Fragmentation and technology risks have come to the fore with advancements in technology emphasising the need to address the lack of interoperability inherent in the existing payments landscape (which was largely cash and cheque-based) and the vulnerability of new forms of payment services to cyber-attacks and personal data leaks.
Recognising the need to address these developments, Singapore enacted the Payment Services Act 2019 ("PS Act"), which consolidated the preceding payments legislation into a single statute as well as expanded the scope of payment services regulation (e.g. by adding certain regulated services such as merchant acquisition services and digital payment token services). Extensive consultation was done and industry feedback was sought by the Monetary Authority of Singapore ("MAS") prior to the enactment of the PS Act, which came into force on 28 January 2020. The PS Act unifies and streamlines Singapore's payments regulatory regime into a single activity-based framework which provides a modular, risk-based approach to allow a single licence holder to potentially undertake multiple payments-related regulated activities.
The PS Act comprises two parallel regulatory frameworks: (1) a licensing regime; and (2) a designation regime. The former focuses on payment services provided to end-customers and merchants, and regulates seven key payment services. More details of the licensing regime is set out in the Payment Services in Singapore section below. The latter enables MAS to designate payment systems and regulate operators, settlement institutions and participants of such payment systems for financial stability, efficiency and/or competition reasons. More details on the designation regime is set out in the Payment Systems section below. Further details on the PS Act are also set out below.
This topic guide should be used as a tool to navigate the payment services regulatory regime in Singapore.
Payment Services in Singapore – Licensing Regime
Payment service providers may offer different combinations of these services, and each payment service is regulated commensurate to the risks that it poses.
(1) Account issuance service
Issuing, maintaining or operating a payment account in Singapore (e.g. e-wallet, debit card, credit card or bank account)
(2) Domestic money transfer service
Providing local money transfer services in Singapore (e.g. providing payment gateway services or payment kiosk services)
(3) Cross-border money transfer service
Providing inbound and/or outbound remittance services in Singapore
(4) Merchant acquisition service
Providing merchant acquisition services (i.e., where the service provider contracts with a merchant to accept and process payment transactions, which results in a transfer of money to the merchant)
(5) E-money issuance service
Issuing e-money in Singapore to allow a person to pay merchants (for goods and services) or transfer e-money to another person (e.g. peer-to-peer transactions)
(6) Digital payment token (DPT) service*
Buying or selling DPTs, or providing a platform to allow persons to exchange DPTs in Singapore (e.g. cryptocurrency exchanges)
(7) Money-changing service
Buying or selling foreign currency notes in Singapore.
*The Payment Services (Amendment) Act 2021, which has been passed in Parliament on 4 January 2021 but has not yet come into operation, expands the scope of "DPT service" to cover, among other things, transfer of DPTs, custody or safeguarding of DPTs, and facilitating the exchange of DPTs without possession of money or DPTs.
Three Classes of Licenses
The PS Act provides for the following three classes of licences and regulatory requirements differ according to the risks posed by the scope and scale of services a licensee is allowed to provide thereunder:
- Money-changing licence: A licensee can only provide money-changing services.
- Standard payment institution ("SPI"): An SPI may provide any combination of the seven payment services subject to certain threshold limits:
- the monthly average total value of all payment transactions accepted, processed or executed by the licensee over a calendar year must not exceed S$3 million (or its equivalent in a foreign currency) for one payment service, or S$6 million (or its equivalent in a foreign currency) for two or more payment services;
- where the licensee provides an e-money account issuance service, the sum of: (a) the daily average total value of all e-money stored in any payment account issued by the licensee to a person resident in Singapore over a calendar year; and (b) the daily average total value of all e-money issued in Singapore and stored in any payment account issued by the licensee to any person the licensee has not determined to be resident outside Singapore over a calendar year must not exceed S$5 million (or its equivalent in foreign currency); and
- where the licensee provides an e-money issuance service, the daily average total value of all specified e-money that is issued by the licensee must not exceed S$5 million (or its equivalent in foreign currency).
- Major payment institution ("MPI"): An MPI may provide any combination of the seven payment services. A person that crosses the thresholds above must obtain an MPI licence.
The PS Act seeks to mitigate risks in four key areas across relevant payment services:
- User Protection: MPIs are required to safeguard certain customer monies ("relevant money") against their own insolvency by using any of the following means:
- an undertaking from a safeguarding institution (e.g. a bank) to be fully liable to the customer for the relevant money;
- a guarantee given by a safeguarding institution for the amount of relevant money;
- depositing the relevant money in a trust account maintained with a safeguarding institution; or
- in such other manner as may be prescribed
(See Section 23 of the PS Act and Regulations 14-16 of the Payment Services Regulations 2019). Separately, see also Guidelines for E-Payments User Protection)
- Money laundering/terrorist-financing risks: Certain payment services attract heightened anti money-laundering and countering the financing of terrorism requirements.
(See Notice PSN01 Prevention of Money Laundering and Countering the Financing of Terrorism – Specified Payment Services, Notice PSN01A Prevention of Money Laundering and Countering the Financing of Terrorism - Persons Providing Account Issuances Services who are Exempted under the Payment Services (Exemption for Specified Period) Regulations 2019, Notice PSN01AA Prevention of Money Laundering and Countering the Financing of Terrorism - Persons Providing Account Issuances Services who are Exempted under the Payment Services (Exemption for Specified Period) Regulations 2019, Notice PSN02 Prevention of Money Laundering and Countering the Financing of Terrorism – Digital Payment Token Service, and Notice PSN10 Prevention of Money Laundering and Countering the Financing of Terrorism - Exempt Payment Service Providers.)
- Interoperability: MAS is given formal powers to ensure interoperability of payment solutions, in the interests of customers and market development. See below the Powers, Payment Investigation and Enforcement section of the topic guide.
- Technology risk: MAS is given powers to impose technology risk management requirements, including cyber risk management requirements, on all licensees. These requirements ensure that there is adequate risk governance and the implementation of adequate controls, particularly in areas such as user authentication, data loss protection and cyber-attack prevention and detection.
(See PSN05 Notice Technology Risk Management, PSN06 Notice on Cyber Hygiene, Guidelines on Risk Management Practices – Technology Risk, FAQ – Notice on Cyber Hygiene and MAS/TCRS/2021/03: Advisory on Addressing the Technology and Cyber Security Risks Associated with Public Cloud Adoption.)
In accordance with the MAS' risk-focused licensing regime, the MAS has also set out in an infographic how these risks relate to each of the seven payment services:
*extracted from MAS Infographic on PS Act.
We also set out below the subsidiary legislation to the PS Act, and a non-exhaustive list of guidance and reference materials applicable to payment services in Singapore:
- Payment Services Regulations 2019
- Payment Services (Composition of Offences) Regulations 2019
- Payment Services (Exemption for Specified Period) Regulations 2019
- Payment Services (Saving and Transitional Provisions) Regulations 2019
- Payment Services (Singapore Dollar Cheque Clearing System and Inter-bank GIRO System) Regulations 2019
- PSN01 Notice Prevention of Money Laundering and Countering the Financing of Terrorism – Specified Payment Services
- PSN01A Notice Prevention of Money Laundering and Countering the Financing of Terrorism - Persons Providing Account Issuances Services who are Exempted under the Payment Services (Exemption for Specified Period) Regulations 2019
- PSN01AA Notice Prevention of Money Laundering and Countering the Financing of Terrorism - Persons Providing Account Issuances Services who are Exempted under the Payment Services (Exemption for Specified Period) Regulations 2019
- PSN02 Notice Prevention of Money Laundering and Countering the Financing of Terrorism – Digital Payment Token Service
- PSN03 Notice on Reporting on Suspicious Activities and Incidents of Fraud
- PSN04 Notice on Submission of Regulatory Returns
- PSN04A Notice on Submission of Statement of Transactions and Profit/Loss
- PSN05 Notice Technology Risk Management
- PSN06 Notice on Cyber Hygiene
- PSN07 Notice on Conduct
- PSN08 Notice on Disclosures and Communications
- PSN09 Notice on Specified Matters and Forms
- PSN10 Notice Prevention of Money Laundering and Countering the Financing of Terrorism - Exempt Payment Service Providers
- Guidelines on Provision of Digital Payment Token Services to the Public [PS-G02]
- Guidelines on Licensing for Payment Service Providers [PS-G01]
- Guidelines for E-Payments User Protection
- Guide to the Essential Aspects of the Payment Services Act 2019
- FAQs – Payment Services Act 2019
- Infographic on the Payment Services Act 2019
- FAQs – Payment Services Licensing
- Ongoing Requirements for Payment Service Providers
- Guidance on Strengthening Financial Institutions’ Countering the Financing of Terrorism (CFT) Controls
- Infographic on Strengthening AML/CFT Controls of Digital Payment Token Service Providers
- FSM-N01 Notice on Submission of Returns by Notified Entities
Committee on Payments and Market Infrastructure (CPMI) and International Organisation of Securities Commissions (IOSCO)
- (11 May 2023) BIS handbook for offline payments with CBDC (Project Polaris)
- (27 March 2023) CPMI final report on facilitating increased adoption of payment versus payment (PvP)
- (1 March 2023) CPMI consultation on proposed ISO 20022 harmonisation requirements | Webpage
- (31 January 2023) CPMI brief: Digital payments make gains but cash remains | Webpage
- (17 November 2022) FSB report on development of a framework using KPIs for monitoring progress towards the targets for addressing challenges to cross-border payments
- (10 December 2021) FSB consultation on data frameworks affecting cross-border payments | IIF response
- (18 November 2021) CPMI consultation on payment systems operating hours to enhance cross-border payments | Press release | IIF response
- (13 October 2021) FSB Progress report under G20 roadmap | Targets for addressing four challenges of cross-border payments | Press release
- (11 October 2021) FSB progress update to G20 finance leaders and central bank governors referring to money market fund (MMF) vulnerabilities, interconnectedness and resilience across NBFI, and challenges in cross-border payments
- (8 October 2021) CPMI call for ideas on expansion of payment-versus-payment settlement as part of G20 cross-border payments roadmap
- (31 May 2021) FSB consultation on quantitative targets for enhancing cross-border payments
- (26 May 2021) EPC Insight: Pushing the frontier of payments: towards a global payment area - an interview on the CPMI cross-border payment project at the BIS
- (20 January 2021) FSB 2021 work programme includes actions relating to cross-border payments | Press release
- (13 October 2020) FSB Stage 3 Report to the G20: Enhancing cross-border payments: roadmap | Press release
- (13 July 2020) CPMI Stage 2 Report to the G20: Enhancing cross-border payments: building blocks of a global roadmap | Technical background report | Press release
- (9 April 2020) FSB Stage 1 Report to the G20: Enhancing cross-border payments | Press release
ECB Regulation on SIPS
ECB Regulation No 795/2014 (ECB/2014/28), amended by ECB Regulation No 2017/2094 (ECB/2017/32) and ECB Regulation (EU) 2021/728, on oversight requirements for systemically important payment systems implements the CPSS-IOSCO principles and defines systemically important payments systems (SIPS) for the eurozone and specifies oversight requirements for SIPS. Applies to systems operated by central banks and private operators | Consolidated version dated 6 December 2017
Entered into force 12 August 2014. Applied from 21 August 2015. Four SIPS identified by ECB: TARGET2, EURO1, STEP2-T and CORE(FR)
- (26 July 2019) Decision of the ECB (ECB/2019/25) on the procedure and conditions for the exercise by a competent authority of certain powers in relation to oversight of SIPS | Response to the consultation on the draft Decision | Published in the OJ 16 August 2019 (Decision EU 2019/1349)
- (15 June 2018) ECB methodology for payment systems
Other EU materials
- (21 March 2023) T2 wholesale payment system which comprises an RTGS system and a central liquidity management tool launched | Press release
- (22 November 2021) Eurosystem framework for electronic payment instruments, schemes and arrangements (PISA) | Assessment methodology | Exemption policy | Consultation on draft framework (October 2020)
- (27 November 2021) ECB consultation on the revision of the ECB Regulation on oversight requirements for systemically important payment systems and two implementing ECB Decisions
- (March 2023) BoE speech on global action to enhance cross-border payments by Victoria Cleland
- (March 2023) BoE, PRA, FCA and PSR review Memorandum of Understanding in relation to payment systems in the UK | Press release
- (February 2023) BoE and HMT consultation on the digital pound | Press release
- (July 2022) HMT consultation and call for evidence on the government’s approach to reforms to the payments regulatory landscape, including the systemic payments perimeter of the Bank of England | Webpage
- (February 2021) Update on Bank of England and FCA Memorandum of Understanding on the supervision of market infrastructure and payment systems
- (July 2020) HMT Payments Landscape Review: Call for evidence - closed 20 October 2020 | Webpage | (October 2021) Response
- (July 2018) Memorandum of Understanding on Payment Systems between the Bank of England, FCA, PSR and PRA
Payment Systems Regulator (PSR)
The PSR regulates payment systems designated by HM Treasury as systemically important under s. 185 Banking Act 2009 | Current list. It is an independent regulator operating as a subsidiary of the FCA, has competition objectives and concurrent powers with the Competition and Markets Authority (CMA) and works to promote innovation, particularly in relation to infrastructure. It became fully operational on 1 April 2015.
Established under the Financial Services (Banking Reform) Act 2013:
- Part 5 - Regulation of payment systems
- Schedule 4 - The Payment Systems Regulator
- Schedule 5 - Procedure for appeals to the CMA
See also Financial Services (Banking Reform) Act 2013 (Commencement No 1) Order 2014 (came into force 1 March 2014) and Financial Services (Banking Reform) Act 2013 (Commencement No 4) Order 2014 (came into force 1 April 2014).
- Annual plans and reports | Annual plan and budget 2023/24
- List of policy statements
- Policy Statement: A new regulatory framework for payment systems in the UK (PSR PS 15/1)
- Policy Statement: PSR Competition Concurrency Guidance (PSR PS15/2) | Finalised Guidance: Enforcement of the Competition Act 1998 (PSR PS15/2.1) | Finalised Guidance: Market reviews, market studies and market investigation references (PSR PS15/2.2)
- PSR General directions
- Market reviews
- (6 October 2022) Final decision: Market review into card-acquiring market remedies | Webpage | Press release | Consultation
- (3 November 2021) Final report: Market review into card-acquiring services | Webpage
- (28 July 2016) Final report: Market review into the ownership and competitiveness of infrastructure provision (MR15/2.3) | Factsheet | Press release
- (21 July 2016) Final report: market review into the supply of indirect access to payment systems (MR15/1.3) | Press release
Consultations and responses
- (28 April 2023) PSR policy statement (PS23/2) on its fees structure for 2023/24 | Press release
- (19 January 2023) PSR summary on Digital Payments Initiative: Barriers to using digital payments | Webpage
- (13 December 2022) PSR consultation on regulatory fees | Press release
- (21 June 2022) PSR consultation paper on cross-border interchange fees market review | Webpage | Press release
- (11 October 2022) PSR policy statement (PS22/2) on extending confirmation of payee coverage: response to CP22/2 | Webpage | Press release
- (26 January 2022) Consultation on initial remedies for card-acquiring market review | Webpage
- (24 May 2021) PSR consultation on requirements for further participation in confirmation of payee
- (2 December 2021) PSR consultation on wider implementation of confirmation of payee
- (21 May 2021) PSR consultation on phase 2 of confirmation of payee | (21 October 2021) Response paper
- (29 July 2020) PSR launches engagement on development of a long-term strategy | Strategy webpage | (June 2021) Consultation on strategy
- (5 March 2020) Review of existing Directions: response to consultation CP19/3 on draft Directions (RP20/1) | Press release | Webpage | Factsheet
- (28 January 2020) Call for input: competition and innovation in the UK's New Payments Architecture | Webpage | Press release
Bank of England
- Payment and settlement webpage
- (2 August 2023) BoE consultation on draft policy statement on discretionary payments by CCPs | Webpage
- (29 March 2023) BoE speech by Victoria Cleland on global action to enhance cross-border payments
- (14 February 2023) BoE consultation response: RTGS – CHAPS Tariff
- (13 February 2023) BoE consultation reponse: Roadmap for the RTGS service beyond 2024
- (6 September 2022) RTGS System and CHAPS Annual Report
- (7 October 2021) BoE and Pay.UK joint consultation response on purpose codes in ISO 20022 Payment Messaging
- (9 February 2021) Update on BoE and FCA Memorandum of Understanding on the supervision of market infrastructure and payment systems
- (13 October 2020) BoE revised approach to ISO 20022 migration | Revised approach and final schemas document
- (6 July 2020) CHAPS Enhanced ISO 20022 Messages - Industry Review
- (December 2019) Access to UK Payment Schemes for Non-Bank Payment Service Providers
- (9 October 2019) Financial Policy Summary and Record of the BoE's FPC meeting on 2 October discussing, among other things, principles to guide prudential regulation and supervision of payments activities
- (July 2019) A brief introduction to RTGS and CHAPS
Formerly the New Payment System Operator (NPSO), Pay.UK is the UK's retail payments authority tasked with providing retail payment services, rules and standards.
- (10 May 2023) Pay.UK press release on how ISO 20022 enhanced data will benefit UK payments
- (23 May 2022) Pay.UK press release on next stage of NPA programme - Pay.UK has received vendor responses to request for proposal
- (22 February 2022) Pay.UK press release on Request to Pay and the Interactive Advance Notice
- (10 November 2021) Pay.UK 2021 update to its insight into the next generation standard for UK retail payments
- (1 September 2021) Pay.UK blog 'Around the world in Request to Pays'
- (19 May 2021) Pay.UK report on future trends in payments
- (30 November 2020) Pay.UK Report: Next Generation Standard for UK Retail Payments - sets out conclusions and intentions regarding the implementation of ISO 20022
- (29 May 2020) Request to Pay Framework launched | Press release
- (5 February 2020) Consultation on the adoption of ISO 20022 for the clearing and settlement capability of the NPA | (14 September 2020) Next Generation Standard for UK Retail Payments - mid term consultation update
- (1 May 2018) BoE and PSR, Press release: consolidation of three UK Payment System Operators
Image Clearing System (ICS)
- C&CCC FAQs
- HM Treasury consultation on legislation to support cheque imaging - Government response published 30 April 2018
Payment systems may be designated under the PS Act for closer supervision if they play a crucial role in the safety and efficiency of the financial system. A payment system may be designated for any of the following reasons:
- if it is considered a systemically important payment system (i.e. systems where a disruption in operations could trigger, cause or transmit further disruption to participants or cause systemic disruption to the financial system of Singapore);
- if it is considered a system-wide important payment system (i.e. systems where a disruption in operations could affect public confidence in payment systems or the financial system of Singapore);
- where the payment system is widely used in Singapore, the designation is necessary to ensure efficiency or competitiveness in any of the services provided by the payment system; or
- the designation is otherwise in the public interest
Currently, only the following payment systems have been designated under the PS Act:
- Fast and Secure Transfers (FAST);
- NETS Electronic Fund Transfers at Point of Sale (EFTPOS);
- Singapore Dollar Cheque Clearing System;
- Inter-bank General Interbank Recurring Order (GIRO) System;
- US Dollar Cheque Clearing System; and
- MAS Electronic Payment System (MEPS+).
MAS also regulates "relevant payment systems", which would encompass payment systems operated by MPIs and other payment services providers, in addition to designated payment systems. The MAS has interoperability powers over relevant payment systems and can impose an access regime on the operators, settlement institutions or participants of that relevant payment system or any other persons or class of persons that determines access to a payment system, on such terms and conditions as it considers appropriate. In considering whether to do so, the MAS will have regard to:
- whether the imposition of that access regime would be in the interests of the public;
- the interests of the current participants, operator and settlement institution of that payment system;
- the interests of persons who, in the future, may require or desire access to that payment system; and
- such other matters as the MAS may consider to be relevant.
(See Section 51 of the PS Act.)
See also, the MAS website, which has a section on payment systems.
This section of the topic guide outlines the investigative and emergency powers of the MAS, as set out in Part 4 and Part 5 of the PS Act.
MAS may, from time to time, inspect under conditions of secrecy, the books of any licensee, an operator, settlement institution or participant of a designated payment system, or an exempt payment service provider (see Section 72 of the PS Act).
MAS may conduct such investigation as it considers necessary or expedient for any of the following purposes:
- to determine whether a licensee or settlement institution of a designated payment system is carrying on business in a manner likely to be detrimental to the interests of its customers or the participants of the payment system, as the case may be;
- to investigate any alleged or suspected offence or contravention of any provision of the PS Act; and
- to ensure compliance with the Act or any notice in writing issued by the MAS under the PS Act.
(See Section 73 of the PS Act.)
Where the payment entity (defined as a licensee, operator or settlement institution of a designated payment system):
- informs the MAS that it is or is likely to become insolvent, is or is likely to become unable to meet its obligations, or has suspended or is about to suspend payments;
- is insolvent, becomes unable to meet its obligations, or suspends payments;
- the MAS is of the opinion that it: (i) is or is likely to become insolvent, is or is likely to become unable to meet its obligations, or has suspended or is about to suspend payments; or (ii) has contravened any provisions of the PS Act; or
- the MAS considers it in the public interest to do so,
- require the payment entity to immediately take any action (or do or not do any act) in relation to its business that the MAS considers necessary;
- appoint one or more persons as statutory adviser to advise the payment entity on the proper management of such business of the payment entity as the MAS may determine on such terms as the MAS may specify by notice in writing; and/or
- assume control of and manage such business of the payment entity as the MAS may determine, or appoint one or more persons as statutory manager to do so on such terms as the MAS may specify by notice in writing.
Further, MAS has specific emergency powers applicable to designated payment systems; where it has reason to believe an emergency exists, or thinks it is necessary or expedient in the interests of the public (or a section thereof) to so act, MAS may:
- direct an operator or settlement institution of a designated payment system to take such action as MAS considers necessary to maintain or restore the safe and efficient operation of the designated payment system (including modifying or suspending any of its rules);
- apply to the General Division of the High Court of Singapore for the winding up or bankruptcy of an operator or settlement institution of a designated payment system; and/or
- require an operator of a designated payment system to cease operation of the designated payment system.
(See Section 79 of the PS Act.)
MAS also has the other following miscellaneous powers under the PS Act, including the power:
- to ensure interoperability between payment accounts and payment systems, and between payment systems (see Section 25, Section 26 of the PS Act).
- to impose an access regime in respect of a relevant payment system (see Section 51 of the PS Act); and
- to obtain information relating to the shareholders of a licensee or of the operator of a designated payment system (see Section 31, Section 62 of the PS Act).