Get best of the week

Types of e-payments licenses in Singapore and how to get them?

Electronic payment systems or electronic money is one of the fastest growing segments of the financial services industry. Entrepreneurs strive to offer the market a reliable, safe and quick alternative to bank accounts. The volume of transfers in electronic form is growing rapidly, which can not but disturb the regulatory authorities.

It is for this reason that separate legislation is appearing everywhere that regulates precisely the sphere of electronic money and payment solutions. Most often we are talking about licenses such as PI, EMI and the like, as well as frameworks for their management and control.

image

Of course, each country that offers such legislation has its own peculiarities: somewhere it’s easier to get, somewhere more complicated; there is more trust in one country, less in another.

Popular directions for obtaining such licenses include:

  • Estonia
  • Lithuania
  • Ireland
  • Malta
  • Singapore;
  • Others.

However, in this article we will talk more about Singapore.

Singapore in the world of electronic payments and business


Singapore is called an economic miracle, since in just 50 a tail it managed to go from a rocky islet with a couple of fishing villages to a large international financial and business center with skyscrapers, banks, R&D centers and incredible opportunities.

Singapore is particularly proud of its electronic systems. You can open a company through the Internet, bureaucracy is minimized as much as possible, and many issues are resolved through a global network. Infrastructure at the highest level, as well as security for people living in this state.

Singapore, like Hong Kong, is actively working with China, but at the same time remains independent. Often companies are opened here to establish ties with mainland China and other countries in the Asian region.

Singapore's tax system also favors business, especially if it operates internationally. Here is a territorial system, which means that taxes are paid only if profits are made in the country.

The only thing worth saying is that today it is difficult for a young company to prove to regulatory authorities that it really does business outside the country. It will take time to earn trust. Although without this, Singapore offers benefits for new companies: reduced taxes on first profit, tax deductions and so on.

image

In terms of e-commerce and e-payment, Singapore is also extremely active. Special legislation has been created that regulates the issues of receiving and issuing electronic money. Since 2020, new legislation has been in force, which slightly predetermined the rules and types of licenses.

Prior to this, there were the so-called SVF - Stored Value Facilities. It was a form of prepaid e-money or payment card. Now they are no longer active, unless a special petition has been submitted to the supervisory authority (MAS) before the end of February. If so, then during the year you can reissue the license in a new way and continue to work.

If you create a new company and get a new license, you will need to comply with the new rules.

However, before you talk about e-payments, you need to say about regular payments. In recent years, opening an account in Singapore has become much more difficult. It will take a long and painstaking work for a young Singaporean or foreign company to open an account here.

So this also became one of the factors why the popularity of payment systems registered in Singapore has grown - you can quickly open an account and conduct business.

New Singapore e-payments rules and license types


The basis is the Payment Services Act (PSA). He offers a framework within which the company will work in the field of payment systems and payment services.

The purpose of these rules is to reduce or remove key risks:

  • Ensure safety of funds owned by customers / merchants;
  • Strengthen key technology standards;
  • Reduce fragmentation and compatibility limitations;
  • Build an adequate system to control and combat money laundering and the financing of terrorism.

The new rules have expanded the understanding of payment services, including local (domestic) money transfer, receipt of a merchant account, payment services based on digital tokens.

They also increase competition between individual players and introduce digital tokens into the mainstream payments.

PSA offers 7 types of licenses:

  • Account Issuance Service;
  • Domestic Money Transfer Service;
  • Cross Border Money Transfer Service;
  • Merchant Acquisition Service;
  • E-Money Issuance Service;
  • Digital Payment Token Dealing and Exchanges;
  • Money Changing Service - this service is a little aloof, since it has lower requirements for obtaining a license.

To carry out activities, you must obtain a general license - Standard Payment Institution License. Such a license allows you to engage in any of the six types of activities and, if necessary, all at once.

image

A standard license is issued and maintained provided that it operates below thresholds:

  • The average volume of payment transactions is less than $ 3 million per month;
  • The average e-money flow is less than $ 5 million.

In both cases, the average is calculated for the year. As long as this threshold is not exceeded, lightweight controls apply. If the threshold is exceeded, then you must obtain a Major Payment Institution license. Additional requirements appear:

  • Above capital requirements - from $ 250,000;
  • Keeping a security deposit of $ 100,000;
  • Deposit Security;
  • Interoperability through access mode, common platform and / or common standards.

Requirements for companies who want to get an e-payments license in Singapore


To conduct activities in the field of e-payments, you will need to fulfill the list of conditions:

  • Obtain and maintain a license, including paying an annual commission;
  • Permanent place of registration in Singapore;
  • The presence of the Singapore Director (citizen or resident alien);
  • Reporting to the regulatory authority (MAS);
  • 20% of controlling persons, directors must be confirmed in the MAS and must meet certain requirements (education, experience, etc.);
  • Audit required;
  • Inspections by MAS;
  • Technology Risk Management.
  • Among the interesting features that are currently in the legislation, it is worth considering, for example, such:
  • The ban on the withdrawal of e-money in cash and exchange for SGD (Singapore dollar);
  • On the personal account of the payment system (e-wallet) the client can have no more than 5000 US dollars.

Opportunities can be expanded if the client undergoes due diligence, however, cash withdrawal remains the prerogative of banks.

In some cases, it is possible to make your life easier and avoid the need to carry out due diligence or even create a complex system for implementing AML rules. In particular, if your platform is focused only on payment for goods and services, and funds to your internal account come from a trusted source, such as a bank account.

According to the result


Singapore has earned its reputation as a reliable partner for many years of work. He continues to improve.

The country offers flexible and multifunctional legislation for business, including for those who decide to engage in e-payments. An important advantage of Singapore is also that the relevant authorities are actively helping to set up a business, and are open for consultation. You can ask any questions and get answers.

image

At the same time, you need to understand that Singapore is extremely scrupulous about its reputation and any attempts to use it as a platform for illegal actions will be severely suppressed. Therefore, any ambiguities are best clarified by experts.

Registration of a company can take a couple of hours, a maximum of a couple of days, but obtaining a license will take more time. This is primarily due to verification of the company, directors and owners.

Despite all this, a company with an e-payments license in Singapore is convenient and practical - an excellent choice for a serious project.

What country and what licenses would you like to know more? Write in the comments.

Have a nice day and business success!

More articles:


All Articles