In November 2017, the Parliament of Singapore received a Consultation Paper that advocated the introduction of the Payment Services Act. Before this Consultation Paper was issued to Parliament, the Monetary Authority of Singapore (MAS) had been operating according to the Payment Systems (Oversight) Act (PSOA) and the Money-Changing and Remittance Business Act (MCRBA). These acts had to be replaced because over time, it had been shown that they had failed to regulate and license payment service providers effectively. These acts also failed to curtail several instances of fraud against consumers.
It took Parliament more than one year to approve the Payment Services Act and make it a law of the country. From the time when it was issued to Parliament in November 2017 to January 14, 2019, when it finally passed into law, the bill was reviewed twice; once in November 2018 and again on the day it was passed into law.
Definition of the Payment Services Act
The Payment Services Act is a better framework put in place by the Singaporean government to oversee the licensing and regulation of payment systems. The main aim of putting this system in place is to protect the interests of consumers as well as have a better handle on regulating the actions of payment service providers. Under the Payment Services Act, all payment services would go through the same legislative system. The Payment Services Act is thus expected to reduce and counter money laundering.
The Payment Services Act works on the foundation of two frameworks. The first framework is related to licensing and the second is a regulatory framework for payment systems.
The Payment Services Act serves as a guide for all financial services in Singapore. It is one of the country’s primary defenses against money laundering. It also protects the rights of Singaporean citizens by shielding them from monetary scams.
The Payment Services Act covers the following payment services:
Domestic Money Transfer Services – These payment services provide money transfer services that exist within the boundaries of the country. They are mostly small money transfer shops scattered across the country.
Money Changing Services – These services make provisions for Singaporeans to trade in foreign currencies. These services usually involve money changers who trade in the exchange of foreign currency notes for physical cash.
E-Money Issuance Services – Such services include any payment service that is involved with the giving of e-money to people within Singapore. The e-money is used to conduct cashless transactions and stays in the owner’s e-wallet.
Money Changing Services– These services make provisions for Singaporeans to trade in foreign currencies. These services usually involve money changers who trade in the exchange of foreign currency notes for physical cash.
Digital Payment Token Services – Such services cover the trading of digital payment tokens. They cater to businesses that create a platform for the buying and selling of digital payment tokens to take place.
Account Issuance Services – These services are services that offer a payment account in the form of credit cards that are not owned by banks. They include any service that offers a payment account used to manage the payment of bills.
Cross–Border Money Transfer Services – These services make provision for the movement of money into or away from Singapore.
However, not all payment services are governed by the Payment Services Act. Some other payment services are unrelated to the Payment Services Act. These services include the following:
Virtual Currencies Used for a Limited Time – These virtual currencies do not refer to cryptocurrencies but instead to currencies that are used only within a particular system such as a game.
E-Money Retained for a Specific Purpose – This money does not fall under the scope of the Payment Services Act because it is already kept aside for a limited purpose. An example of this is a prepaid card.