Applying for a Major Payment Institution Licence in Singapore

Last updated on July 12, 2022

If you are the owner of a business that is looking to provide a payment service to your customers, you might need a licence to do so. One such licence is a major payment institution licence, which is required to conduct certain types and scales of activities in Singapore.

There are currently more than 170 licensed major payment institutions in Singapore, and you can read on to find out how you can be one too!

This article will cover the following topics:

What is the Major Payment Institution Licence?

The major payment institution licence is one of three classes of payment service provider licences issued by the Monetary Authority of Singapore (MAS). The other two licences are the money-changing licence, and standard payment institution licence.

Payment service provider licences allow licensees to provide any of the seven payment services that are regulated by the Payment Services Act 2019 (PSA). The regulated payment services are as follows:

Account issuance service
Domestic money transfer service
Cross-border money transfer service
Merchant acquisition service
E-money issuance service
Digital payment token service
Money-changing service

However, you do not need a licence to provide services listed in Part 2 of the First Schedule of the PSA, as they are not payment services and hence, are not regulated under the PSA. Examples of such excluded services include:

The service of transporting currency;
The service of executing a payment transaction based on a cheque or cashier’s order; and
The service of executing a payment transaction on behalf of the payer or payee, provided by a commercial agent authorised to negotiate or conclude the sale or purchase of goods or services.

When Should You Apply For a Major Payment Institution Licence?

You need to apply for a major payment institution licence if you wish to provide payment services above the following specified thresholds:

S$3 million monthly transactions for any payment service (other than e-money account issuance and money-changing services);
S$6 million monthly transactions for two or more payment services (other than e-money account and money-changing services); or
S$5 million of daily outstanding e-money.

However, you can be exempted from the requirement of holding a major payment institution licence if you are:

A bank licensed under the Banking Act;
A merchant bank approved as a financial institution under the Monetary Authority of Singapore (MAS) Act;
A finance company licensed under the Finance Companies Act; or
A person licensed to carry on the business of issuing credit cards or charge cards in Singapore under section 57B of the Banking Act.

The rationale for this exemption is to avoid double regulation of the same activity since you would already be subject to regulation under the respective Acts.

When should you apply for a money-changing licence or standard payment licence instead?

Business entities that wish to provide only money-changing services (i.e. business of buying and selling foreign currency notes) will need to apply for a money-changing licence.

However, if you want to offer one or more of the payment services (other than money-changing services, or in addition to money-changing services) regulated by the PSA, you will have to get either a major payment institution licence or a standard payment institution licence.

As discussed, a major payment institution licence is required if you wish to provide services above the specific thresholds mentioned. On the other hand, a standard payment institution licence is required if you wish to provide payment services below the specified thresholds.

If you are still unclear about whether and when you need a major payment institution licence, you can refer to the flowchart below:

Who Can Apply For the Major Payment Institution Licence?

Singapore-incorporated companies or foreign corporations registered in Singapore that meet the following requirements can apply for a major payment institution licence:

Have a permanent place of business or registered office;
Have a minimum base capital of S$250,000; and
With a board of directors that have either:
- At least 1 executive director who is a Singapore Citizen or Singapore Permanent Resident
- At least 1 non-executive director who is a Singapore Citizen or Singapore Permanent Resident and at least 1 executive director who is a Singapore Employment Pass holder.

How to Apply For a Major Payment Institution Licence

Application procedure and documents required

In order to apply for a major payment institution licence, you will have to complete and submit this online form, which can be accessed via Singpass. The application process is estimated to take about 45 minutes. You will also require a number of supporting documents, including:

Copy of your company’s ACRA business profile dated within 30 days of the date of application
Organisational chart of the applicant.
Shareholding chart of the applicant, including all controlling interests.

The full list of documents can be found here, under the header “Application Checklist”.

Application fee payable

You are also required to pay a non-refundable application fee to MAS after you have submitted the application. For a major payment institution licence, the application fee is a combination of the fees for each payment service applied for (S$0 for account issuance service, S$500 for money-changing service and S$1,500 for each of the other payment services).

How will your application be evaluated?

MAS has the discretion to grant or refuse to grant a major payment institution licence to your business. Thus, it is important to take note of the factors that MAS takes into consideration in assessing your application for a licence, including the following:

Whether the controllers and directors of the business, e.g. the sole proprietor, partners, directors and CEO, shareholders, and employees are fit and proper, in accordance with the MAS Guidelines on Fit and Proper Criteria.
Whether the controllers and directors of the business have sufficient qualifications and experience, especially in operating a business providing payment services and compliance with regulatory requirements.
The financial condition and track record of the business.
The ability to comply with regulatory requirements under the PSA, including having in place compliance, safeguarding, technology risk management and audit arrangements.

The full list of factors can be found here, under the header “Admission Criteria”.

Once MAS approve your application for a major payment institution licence, your business will be listed in the Financial Institutions Directory, which is searchable by members of the public.

What are the Obligations of Major Payment Institution Licence Holders?

As a major payment institution licence holder, you are required to comply, on an ongoing basis, with the regulatory requirements under the PSA. These requirements are captured in the Notices and Guidelines published by MAS, which can be found here. Some of these ongoing obligations are:

Anti-Money Laundering and Countering the Financing of Terrorism Requirements: A licensee must comply with the requirements in the MAS Notices on Prevention of Money Laundering and Countering the Financing of Terrorism and Reporting of Suspicious Activities & Incidents of Fraud. This includes having systems in place for risk assessment and mitigation, record-keeping and customer due diligence.
Business Conduct: A licensee must comply with business conduct requirements, such as safeguarding of customers’ monies, record of transactions, issuance of receipts, display of exchange rate and fees etc.
Disclosures and Communications: When communicating with all customers and potential customers, a licensee must accurately describe and disclose the scope of its licence and ensure that they receive timely updates regarding any changes to its licence.

It is important to bear these continuing obligations in mind and be updated on any regulatory changes and the guidelines published by MAS. Do note that in the event you fail to comply with the obligations applicable to your business, MAS may revoke or suspend your licence.

What is the Validity Period of a Major Payment Institution Licence?

Once granted, a major payment institution licence does not expire and is valid until any of the following scenarios occurs:

The licence is revoked by MAS;
The licence lapses; or
The licensee surrenders its licence.

Once you stop holding a major payment institution licence (whether it has lapsed, been revoked, or surrendered), your business will be removed from the Financial Institutions Directory, and you must stop providing any type of payment service with immediate effect.

Do note that it is an offence to continue providing payment services without a valid licence. If you do so, you will be liable, upon conviction, to a maximum fine of $100,000 and in the case of a continuing offence, to a further fine of up to $10,000 a day.

What If You No Longer Need Your Major Payment Institution Licence?

If you no longer need your major payment institution licence, you can choose to surrender your licence by submitting a written notice of surrender to MAS. You can do so by filling in this online form, which can be accessed via Singpass.

On the other hand, you may still be in the business of providing payment services but are no longer providing services above the specified threshold. In this situation, you can apply to vary or change your major payment institution licence to one of the other two licence classes. You can do so by filling in this online form, which you can access via Singpass.

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A major payment institution licence is needed for a business to provide certain types and scale of payment services in Singapore. This article has outlined the application processes for applying for a major payment institution licence, the ongoing regulatory requirements that must be complied with, the validity period of the licence and when it can be surrendered.

That said, you may wish to consult a financial technology (fintech) lawyer who can not only help you with applying for a major payment institution licence, but also provide you with further advice such as:

Whether any of the exclusions or exemptions apply to you;
The class of payment service provider licence that is most suitable for your business;
What to include when filling in your application, considering the factors that MAS looks at, so as to increase your chances of obtaining a licence; and
Complying with the ongoing regulatory requirements as a major payment institution licence holder.

You may get in touch with experienced fintech lawyers in Singapore here.