Overview of Payment Services Act

The Payment Services Act 2019 (PSA) serves as the primary legislation governing payment systems and payment service providers in Singapore. Administered by the Monetary Authority of Singapore (MAS), the framework provides a modular, risk-based regulatory structure designed to support FinTech innovation while addressing money laundering, technology risk, and consumer protection concerns.

Following legislative amendments that came into effect on 4 April 2024, MAS expanded the scope of regulated activities under the PSA to capture digital payment token (DPT) custody, cross-border remittance arrangements, and DPT transmission facilitation. Any corporate entity operating or establishing a payment service business in Singapore must hold the appropriate payment institution licence unless granted a specific statutory exemption under the Act.

The 7 Regulated Payment Services Under the PSA

MAS regulates seven distinct payment services under the First Schedule of the Payment Services Act:

1. Account Issuance Service: The service of issuing a payment account (such as an e-wallet) or operating a payment account that allows customers to deposit, store, or withdraw funds.
2. Domestic Money Transfer Service: Processing local fund transfers between payers and payees in Singapore where neither party is a financial institution.
3. Cross-Border Money Transfer Service: Facilitating inbound or outbound international remittance services, including arranging money transfers between overseas jurisdictions.
4. Merchant Acquisition Service: Processing payment receipts and transactions on behalf of merchants, including payment gateway services and point-of-sale (POS) terminal provision.
5. E-Money Issuance Service: Issuing electronically stored monetary value denominated in any currency for making payment transactions.
6. Digital Payment Token (DPT) Service: Buying, selling, or facilitating the exchange of cryptocurrency and digital tokens. Under the expanded 2024 perimeter, this includes DPT custody wallet services and arranging DPT transfers without taking direct possession of customer funds.
7. Money-Changing Service: Buying or selling physical currency notes and coins.

Types of Payment Institution Licences

The PSA establishes three distinct licensing tiers based on the nature, transaction volume, and operational risk of the payment business:

Note: Major Payment Institutions are subject to comprehensive customer asset safeguarding rules, including maintaining bank guarantees, trust accounts with approved financial institutions, or statutory deposit arrangements.

Key Regulatory & Admission Requirements for Applicants

To secure and maintain a payment institution licence, MAS enforces key operational, governance, and capital criteria:

• Executive Presence: The applicant company must be incorporated as a Singapore entity with a physical office in Singapore. It must appoint at least one executive director who is a Singapore citizen or Permanent Resident.
• Fit and Proper Test: Directors, Chief Executive Officers, and substantial shareholders (20% or greater control) must pass MAS “fit and proper” criteria regarding integrity, financial soundness, and professional capability.
• Mandatory Legal Opinion: Under MAS guidelines updated in August 2024, all standard and major payment institution applicants must submit an independent legal opinion issued by a qualified law firm evaluating their business model and statutory perimeter under the PSA.
• Independent External Audit: Applicants applying to provide Digital Payment Token (DPT) services must submit an independent audit assessment verifying internal controls, regulatory policies, and technology risk management systems.
• Compliance & Risk Infrastructure: Entities must maintain local, dedicated compliance resources. DPT service providers are required to maintain an in-house local compliance officer to handle anti-money laundering and countering the financing of terrorism (AML/CFT) obligations under MAS Notice PS-N02.

Frequently Asked Questions

What is the difference between an SPI and an MPI licence?

A Standard Payment Institution (SPI) operates under transaction volume caps (up to S$3 million per month for a single service) and reduced base capital rules (S$100,000). A Major Payment Institution (MPI) operates above these thresholds, holds higher base capital (S$250,000), and must comply with strict customer asset safeguarding obligations.

Are crypto and stablecoin service providers regulated under the PSA?

Yes. Entities providing commercial digital payment token (DPT) services—including token exchanges, custody wallet providers, and transfer facilitators—must obtain an SPI or MPI licence with approval for DPT services under the Payment Services Act.

How long does a MAS payment licence application process take?

Standard application reviews generally require between 6 and 12 months, depending on the complexity of the operational model, the quality of regulatory documentation, and compliance readiness.