How to Get a Payment Service Provider Licence in Singapore
If you are planning to provide payment services in Singapore, you are required by law to hold a payment service provider licence. This article will cover:
What is a Payment Service Provider Licence?
A payment service provider licence is a licence issued by the Monetary Authority of Singapore (MAS). Such a licence which allows licensees to provide payment services that are regulated by the Payment Services Act (PSA). These payment services include:
|Type of payment service||Description|
|Account issuance service||Issuing a payment account or any service relating to any operation required for operating a payment account (e.g. e-wallets and non-bank issued credit cards). It also includes an e-money account issuance service which is the service of issuing a payment account that stores monetary value electronically.|
|Domestic money transfer service||Providing local funds transfer service in Singapore (e.g. payment kiosk services and payment gateway services).|
|Cross-border money transfer service||Providing inbound or outbound remittance service in Singapore.|
|Merchant acquisition service||Providing merchant acquisition service in Singapore. The service provider processes merchants’ payment transactions from payment receipts on behalf of the merchant.
Usually the service includes providing a point-of-sale terminal (e.g. credit card machine) or online payment gateway (i.e an online service that authorises and processes payments for businesses).
|E-money issuance service||Issuing e-money that users can use to pay merchants, or transfer to another individual (e.g money stored in e-wallets).|
|Digital payment token service||Buying or selling digital payment tokens (i.e. cryptocurrencies), or providing a platform to allow persons to exchange digital payment tokens.|
|Money-changing service||Buying and selling foreign currency notes.|
Types of Payment Service Licences
If you wish to provide any of the above payment services, it is important for you to apply for the appropriate payment service provider licence. There are three types of payment service provider licences you can apply for:
- Money-changing licence
- Standard payment institution licence; and
- Major payment institution licence
Business entities that wish to provide only money-changing services (i.e. business of buying and selling foreign currency notes) can do so with a money-changing licence. If you wish to provide other payment services, then either a standard payment institution licence or a major payment institution licence is required.
Standard payment institution licence and major payment institution licence
A standard payment institution licence or a major payment institution licence, allows you to offer one or more of the payment services regulated by the PSA.
Do note that you should hold a money-changing licence, instead of a standard payment institution licence or a major payment institution licence, if you wish to provide only money-changing services.
Additionally, a standard payment institution licence is applicable only if you wish to provide payment services below these 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)
- S$5 million of daily outstanding e-money
On the other hand, a major payment institution licence is applicable only if you wish to provide payment services above the specified thresholds mentioned.
How to Apply For a Payment Service Provider Licence in Singapore
Check if a licence is required for the payment service you wish to provide
You are required to hold a payment service provider licence only if the service is regulated by the PSA.
For example, you are exempted from the requirement to hold a licence for because they are not considered payment services, and are hence not regulated by the PSA:
- Free-of-charge services provided by technical service providers (e.g. free online storage services, free digital security services, etc); and
- Services in respect of limited purpose e-money (e.g. provision of prepaid cards and loyalty points).
Check if you meet the eligibility criteria for getting the licence
Criteria for money-changing licence
The individual, partners or directors of a business entity applying for a money-changing licence must have at least 1 year’s relevant working or business experience on a full-time basis. Depending on the type of business entity, they must also meet the following requirements:
|Type of business entity||Requirements|
|Sole proprietorship||The individual applicant must be a Singapore citizen|
|Partnership or Limited Liability Partnership||A majority of the partners must be Singapore citizens. If there are only two partners, then at least one of them must be a Singapore citizen.|
|Singapore-owned company||The majority of the company’s equity shareholdings should be beneficially owned and controlled by Singapore citizens.
A majority of the board of directors should be Singapore citizens as well. If there are only two directors, then at least one of them must be a Singapore citizen.
|Foreign-owned company||Parent company must:
Criteria for standard payment institution licence and major payment institution licence
Applicants applying for a standard payment institution licence or major payment institution licence must meet the following criteria:
- Be a company incorporated in Singapore or a foreign corporation registered in Singapore
- Have a permanent place of business or registered office
- At least S$100,000 base capital for a standard payment institution licence or at least S$250,000 base capital for a major payment institution licence
- Board of directors must consist either of:
- At least 1 executive director who is a Singapore citizen or Singapore Permanent Resident; or
- At least 1 non-executive director who is a Singapore citizen or Singapore Permanent Resident and 1 executive director who is a Singapore Employment Pass holder
Other criteria for money-changing licence, standard payment institution licence and major payment institution licence
MAS will also consider the following factors when assessing an application for a payment service provider licence:
- Whether the applicants are fit and proper
- Ownership and shareholding structure (in the case of a money-changing licence) or governance structure (in the case of a standard payment institution licence and a major payment institution licence)
- Relevant qualifications and experience
- Financial conditions and track record
- Business plan and model
- Whether granting the licence will serve public interest in Singapore
Additionally, MAS will consider the following factors when assessing an application for a standard payment institution licence and major payment institution licence:
- Regulatory status in other jurisdictions, where applicable
- Commitment to operations in Singapore (for applicants with a holding company)
- Ability to comply with obligations under the PSA such as compliance, safeguarding (in the case of a major payment institution licence), technology risk management and audit arrangements
Submit your application
To apply for a payment service provider licence, you will need to complete and submit Form 1. The following documents need to be attached and submitted together with Form 1:
- Copy of business profile from the Accounting and Corporate Regulatory Authority of Singapore that is dated within 30 days of application
- Scanned copies of the audited financial statements of the applicant, or unaudited financial statements if an independent audit has not been conducted
- Copy of hotel licence (if applicant is a hotel)
- Organisational chart of the applicant, including the compliance function
- Shareholding chart of the applicant, including all controlling interests
- Copy of business profile(s) dated within 30 days of the date of application of each corporate shareholder (if applicable)
- Clear copy of both the front and bank of Employment Pass/passport of the shareholder(s) if they are not a Singapore citizen or Permanent Resident
- Business plan that indicates the business’ compliance with the PSA and other relevant legislations
- AML/CFT policies and procedures that show compliance with the relevant Notices, as well as the name and CV of the AML/CFT compliance officer
In addition, sole proprietors must submit their CV and supporting documents that show their experience in payment services, and a copy of their Medisave liabilities and payment status.
Partnerships, Singapore companies and companies incorporated overseas must also seek approval for the appointment of every partner, director and CEO, by submitting Form 3 with the required supporting documents.
After submitting the online form, all applicants must pay a non-refundable application fee for the type of licence and payment services applied for. The application fee for a money-changing licence is S$500.
For a standard payment institution licence and a major payment institution licence, the application fee is S$1,000 and S$1,500 respectively, or the sum of the amounts below of the payment services applied for (whichever is higher). You may refer to the table below on the respective fees for each type of payment service.
|Type of payment service||Standard payment institution licence||Major payment institution licence|
|Account issuance service||S$0||S$0|
|Domestic money transfer service||S$1,000||S$1,500|
|Cross-border money transfer service||S$1,000||S$1,500|
|Merchant acquisition service||S$1,000||S$1,500|
|E-money issuance service||S$1,000||S$1,500|
|Digital payment token service||S$1,000||S$1,500|
What to Do After Obtaining Your Payment Service Provider Licence
Comply with obligations
Once you’ve obtained your payment service provider licence, you will need to comply with the following obligations:
- AML/CFT requirements that are set out in the Notices on Prevention of Money Laundering and Countering the Financing of Terrorism, and Notice on Reporting of Suspicious Activities & Incidents of Fraud
- Submitting of periodic regulatory returns in accordance with the requirements set out in the Notice on Submission of Regulatory Returns
- Cyber hygiene requirements that are set out in the Notice on Cyber Hygiene
- Business conduct requirements that are set out in the Notice on Conduct
- Making accurate representation on the scope of your licence and providing the required disclosures that are set out in the Notice on Disclosures and Communications (where applicable)
- Appointing an auditor to carry out an annual audit of your accounts and transactions, as well as compliance with regulations and requirements. You must also ensure that the auditor submits a report to the MAS in Form 4.
More information on the obligations of a payment services provider licensee can be found in the Guidelines on Licensing for Payment Service Providers and Key Notices for payment service providers.
Pay annual licence fees
Licensees are also required to pay annual licence fees and the amount depends on the type of licence held. The annual fee of a money-changing licence is S$1,500.
For a standard payment institution licence and a major payment institution licence, the annual fee is S$5,000 and S$10,000 respectively, or the sum of the fee for each type of payment service provided (whichever is higher).
You may refer to the table below for the respective fees of each payment service.
|Type of payment service||Standard payment institution licence||Major payment institution licence|
|Account issuance service||S$0||S$0|
|Domestic money transfer service||S$5,000||S$10,000|
|Cross-border money transfer service||S$5,000||S$10,000|
|Merchant acquisition service||S$5,000||S$10,000|
|E-money issuance service||S$5,000||S$10,000|
|Digital payment token service||S$5,000||S$10,000|
What is the Validity Period of a Payment Service Provider Licence?
A payment service provider licence has no fixed validity period. A licence is valid until it is revoked by MAS (e.g., if you fail to comply with the obligations above), or if the licensee surrenders their licence. The licence may also lapse if the licensee:
- Is wound up or dissolved
- Has passed away or been declared bankrupt
- Has not commenced business in at least one of the payment services authorised by the licence for 6 months since the grant of the licence
- Has ceased to provide all of the payment services authorised by the licence for 6 months
- Does not accept, process or execute any payment transaction for any payment services (except digital payment token services) for 6 months since the grant of the licence
- Is licensed to provide digital payment token services, and fails to provide at least one of the following services for 6 months after the grant of the licence:
- Accepting, processing, or executing any payment transaction
- Buying or selling any digital payment token in exchange for another digital payment token
- Executing any transaction that involves any exchange of digital payment token for another digital payment token
Are You Able to Vary or Change Your Type of Payment Service Provider Licence?
Yes, you may vary your payment service provider licence by adding or removing any payment service. Alternatively, you may change the type of payment service provider licence you hold. An application for a variation or change of licence can be submitted using Form 2, along with the following documents attached:
- Scanned copies of the latest audited financial statements of the applicant, or unaudited financial statements if an independent audit has yet to be conducted
- Organisational chart of the applicant, including the compliance function and if there are any intended changes to it
- Business plan that indicates the business’s compliance with the PSA and its regulations
- AML/CFT policies and procedures and if there are any intended changes to it
The relevant application and licence fees (stated in the tables above) will apply when you change or vary your payment service provider licence.
If you wish to apply for a payment service provider licence in Singapore, you will first need to determine what type of licence you require and check if you meet its eligibility criteria. You will then need to submit the relevant form along with the supporting documents required, and pay the appropriate application fee. Once you have obtained your licence, it is important to comply with the necessary obligations to prevent your licence from getting revoked.
The process of applying for a payment service provider licence in Singapore can be tedious and complicated, with many rules and regulations to comply with. You may wish to consider seeking legal advice from a fintech lawyer, who can help advise you on and take you through the relevant legal and regulatory requirements, and ensure a smooth application process.
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