Regulations on E-money Float and Electronic Payments
Prime Minister's OfficeSpeakers
Summary
This question concerns regulations on e-money floats and consumer protection in electronic payments, as raised by Mr Desmond Choo. Deputy Prime Minister Tharman Shanmugaratnam explained that the Payment Services Bill expands the definition of protected e-money and lowers the safeguarding threshold from S$30 million to S$5 million. He highlighted that payment institutions will receive greater flexibility through expanded safeguarding options, such as account segregation, aligning Singapore with other major global financial centers. Furthermore, the Minister detailed the E-Payments User Protection Guidelines, which establish frameworks for liability in unauthorized transactions and simplified error resolution to take effect the following January. These combined efforts aim to ensure a proportionate regulatory environment that safeguards consumers while fostering innovation and competitiveness within the e-payments processing sector.
Transcript
1 Mr Desmond Choo asked the Prime Minister (a) how do Singapore's regulations on e-money float compare to those of the major global financial centers; (b) what is the progress on the consultation on "user protection measures in electronic payments"; and (c) how will the Ministry protect consumer interests while ensuring Singapore's competitiveness as an e-payments processing hub.
Mr Tharman Shanmugaratnam (for the Prime Minister): Singaporeans have a growing range of e-payment options available to them. Besides PayNow, debit cards and credit cards, stored value facilities in the form of e-wallets are gaining popularity.
Currently, MAS requires entities who hold a stored value float in excess of S$30 million in these stored value facilities to safeguard the float with a bank licensed by MAS.1
Consumers will enjoy better protection of their funds held in stored value under the Payment Services Bill (“PSB”) that is being introduced in Parliament today. It contains two key enhancements.
First, more types of stored value, or e-money, will be protected under the PSB. E-money will include not just pre-payment for goods and services such as value stored in transport cards, but also any monetary value that is held for future payment transfers between individuals. This means that the value held in e-wallets that people use to pay merchants or pay each other will also be protected in future.
Second, the threshold of e-money that will be protected under the PSB will be lowered from S$30 million to S$5 million. This means that any e-money held by a payment institution will be wholly safeguarded if the average daily float exceeds S$5 million.2 If the average daily float does not exceed S$5 million, the safeguarding measures will not apply, provided the payment institution makes appropriate disclosures to consumers.
We have sought to protect consumer interests while encouraging innovation in e-payments and ensuring Singapore’s competitiveness as a payment services hub. This requires that our regulations are proportionate to the risks. To give payment institutions adequate flexibility, MAS will expand the options for safeguarding measures available to Major Payment Institutions, beyond the current requirement of a bank guarantee. Under the PSB, a guarantee given by a prescribed financial institution or segregation of customer monies in a bank account will be recognised as alternative safeguarding measures.3
These two key enhancements on the scope of e-money and options for safeguarding measures are similar to those in Australia, Hong Kong, and the United Kingdom.
To complement the measures in the PSB and existing regulations on banking services, MAS has issued the E-Payments User Protection Guidelines (the “Guidelines”). The Guidelines essentially aim to enhance consumer confidence in e-payments. Financial institutions and e-payment users can look to the Guidelines for (a) their respective responsibilities for ensuring secure e-payment transactions; (b) how liability for unauthorised transactions ought to be apportioned; and (c) simplified error resolution processes when a user sends money to the wrong recipient. The Guidelines were finalised in September after MAS’ public consultation earlier this year. They will take effect in January next year.
MAS will continue to engage both the industry and the public as the e-payments landscape evolves, so that we provide assurance to users without holding back innovations that enhance competition and efficiency in payment services.