Payment Services Act,
how does it affect you?

Written by Shogo Tsuji, Internal research team,
24 Jan 2020, 3 minutes

As we enter the new year, consumers have become savvier and welcoming to new payment methods. Thus, new legislation has been introduced; namely the Payment Service Act.

To date, the law only governs certain financial services. The Payment Services Act (hereby known as PSA for short)that will come into effect on 28th January 2020 will be the first of its kind to govern payment services.

There are two pieces of existing legislation, namely the Payment Systems (Oversight) Act (PS(O)A) and the Money-changing and Remittance Businesses Act (MCRBA). The former governs e-money issuance services, while the latter governs cross-border money transfer services and money-changing services.

However, the payment landscape has changed dramatically; from traditional cash to digital payment over the last few years; International and regional technology providers such as Alibaba, Tencent and Grab have developed their own digital wallets. These big players straddled the lines between payments and remittance; blurring the lines between payment services and other financial services.

As a result, merchants that accept digital payment are exposed to additional risk without any legislation to protect them.

With the aim of resolving this issue, the Monetary Authority of Singapore provides the PSA. Here’s what you need to know about the PSA.

What is PSA?

PSA is a new act for the licensing and regulation of payment service providers under a single legislation, and the oversight of payment systems by expanding the scope of regulated payment services.

It considers seven new financial services like payment services; in addition to the previous three services regulated by the PS(O)A and MCRBA, the PSA covers four new payment services; namely account insurance services, domestic money transfer services, merchant acquisition services and digital payment token service.

Furthermore, if a business offers one or more of the payment services under the PSA’s scope, they will need to apply for one of the following licenses: Money-changing licence, Standard payment institution (SPI) licence, and Major payment institution (MPI) licence.

The PSA also aims to mitigate following four key risks: Anti Money Laundering/ Combating the Financing of Terrorism, User protection, Fragmentation and Interoperability, and Technology and Cyber Risk.

Who and how will the PSA affect?

Under the PSA, your monies are safeguarded from loss through the service provider’s insolvency by following the means: an undertaking or guaranteed by any bank in Singapore or prescribed financial institution to be fully liable to the customer for such monies, a deposit in a trust account or safeguarding in such other manner as may be prescribed by the Monetary Authority of Singapore.

Because of this, merchants may recover part of the sums outstanding just in case the service provider has surrendered its licence or its licence has lapsed or been revoked.

Therefore, their transaction with payment providers will be safer.

MC Payment will be applying for the relevant licenses to operate within the legislation of Singapore and to protect the interest of our merchants and partners.

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