20 October 2022 Peiying Chua Heikes  - Yong En Koh - Alcander Seah Financial Regulation

Consultation on Amendments to Restrictions on Personal Payment Accounts that Contain E-Money

On 18 October 2022, the Monetary Authority of Singapore (“MAS”) published a consultation paper on proposed amendments to limits currently imposed on each personal payment account that contains e-money issued by major payment institutions (“MPIs”). 

The consultation paper seeks views on the MAS’ proposal to:

  • revise the caps on personal e-wallets, by raising the:
  1. maximum amount of funds that can be held at any given time from $5,000 to $20,000 (“Stock Cap”); and
  2. maximum total outflow of funds, over a rolling 12-month period, from $30,000 to $100,000 (“Flow Cap”).
  • amend the Payment Services Regulation 2019 (“PSR”) to exempt an MPI in a White-Label Account Issuance Arrangement (as defined below) from section 24(1)(c) of the Payment Services Act 2019 (“PS Act”).

Caps on personal e-wallets

This proposal follows a survey conducted by the MAS with e-wallet account issuance service providers, and feedback collated from payment service users. In this connection, the MAS found that payment service users have benefitted from e-wallet issuers’ product offerings. The revisions in the Stock Cap and Flow Cap are thus intended to facilitate greater consumer convenience and innovation in the e-payments landscape, while ensuring that the MAS’ financial stability objective (i.e. mitigating potential significant outflows from bank deposits to non-bank e-wallets) can still be met. 

In proposing to raise the Stock Cap and Flow Cap, the MAS also cautioned that the increased funds held or transferred through personal e-wallets could consequently increase potential losses incurred through scams that involve e-wallets. In this regard, the MAS will continue to work closely with the industry to ensure that they implement robust anti-scam controls that are commensurate with their business and risk profile, and also highlighted that e-wallet issuers should take this risk into account and assess if their anti-scam controls should be strengthened. 

Exemption for MPI in a White-Label Account Issuance Arrangement

Under the PS Act, an MPI that issues 2 or more e-wallets to any payment service user must aggregate all the e-money in the e-wallets issued to that payment service user in applying the Stock Cap and Flow Cap (“Aggregation Requirement”).

Following feedback received from MPIs that are exploring entering into arrangements with e-money issuance service providers where (1) the MPI will issue e-wallets on behalf of a third-party e-money issuer, (2) the e-wallets will store e-money issued by the third-party e-money issuer to their payment service users, and (3) these services are provided to 2 or more e-money issuers (collectively, a “White-Label Account Issuance Arrangement”), the MAS has proposed to amend the PSR to exempt such MPIs who enter into a White-Label Account Issuance Arrangement from the Aggregation Requirement. 

This means that the MPI will not be required to aggregate the e-money in e-wallets issued to the same payment service user (in respect of e-money issued by a different third-party e-money issuer) under the White-Label Account Issuance Arrangement, for the purposes of applying the Stock Cap and Flow Cap.

Timelines

The consultation closes at 1159 PM on 25 November 2022.