Singapore eases access to legal help to drive payment services

Monetary Authority of Singapore streamlines access to legal help specialised in payment services, so new operators in the sector can ensure compliance and be onboarded more quickly.
Written by Eileen Yu, Senior Contributing Editor

Singapore has introduced a new initiative to streamline access to legal help, so payment services providers can more easily get assistance from law firms specialised in their sector. The new Payments Regulatory Evaluation Programme (PREP) aims to pull together a list of legal services and provide fintech companies information on regulations related to the payment market. 

Introduced by the Monetary Authority of Singapore (MAS) and Singapore Academy of Law (SAL), the new scheme offers a streamlined process to access lawyers who could help payment operators ensure compliance with local laws. Upon filling in a standard questionnaire about their business in Singapore, these payment services providers receive a customised assessment report on local legislations applicable to their business in the city-state. 

In a joint statement released Friday, the two organisations said the programme would first run on a two-month pilot of the programme, with participation from seven local and international law firms. This then would lead to a formal launch of PREP in November and a longer list of law firms providing such specialised legal services. 

Law firms involved in the pilot included Allen & Gledhill, Baker McKenzie, Wong & Leow, and Linklaters Singapore.

MAS' chief fintech officer Sopnendu Mohanty said: "Singapore's vibrant fintech ecosystem and strong regulatory environment have attracted substantial interest from foreign and local firms to establish their payment services business in Singapore. With the upcoming commencement of the Payment Services Act, it is important that the payment services industry is well supported in all aspects.

"MAS has developed PREP to ensure payment firms that want to engage legal services to support them in their business can do so easily and quickly," Mohanty said.

Adding that the development of payment services regulations was an important aspect of Singapore's evolution as fintech hub, SAL's COO Paul Neo said the new programme could help payment services providers assess their compliance with the country's new act. 

Neo noted: "In time to come, we hope our lawyers will also develop legal tech solutions in the regulatory and compliance tech fields to complement their legal advisory services to the payments industry." 

Singapore touts growth in digital payments adoption

In a parliament session held earlier this week, the Singapore government provided an update on the adoption of digital payment services here, where it estimated that more than 65% of citizens aged between 20 and 75 had registered for the national e-payment service, PayNow. Introduced in July 2017, the peer-to-peer funds transfer service enabled users to send and receive money using mobile numbers or Singapore's national identification (NRIC) number, regardless of the bank they used. 

There currently were 2.8 million registered PayNow users, of which 1.8 million were bank accounts associated with mobile phone numbers and the remaining number linked to NRIC numbers, said Singapore's Education Minister Ong Ye Kung, who spoke in parliament on behalf of Minister-in-charge of MAS Tharman Shanmugaratnam.

Ong added that the number of PayNow transactions also climbed to more than 5 million, compared to just 150,000 in 2017, and generated transaction values exceeding SG$1 billion ($718.37 million) each month. 

The enterprise version of the service PayNow Corporate, which was launched in August 2018, had chalked up more than 115,000 registered unique entity numbers (UENs). This accounted for about half of the total number of UENs issued to active businesses in Singapore. 

The adoption of the national QR code, SGQR--launched in September last year--also had gone up, with more than 32,000 of such codes deployed across various merchants including retail stores, F&B outlets, supermarkets, and hawker centres. he noted that this accounted for 20% of all retail acceptance points across Singapore. 

Ong said: "To date, SGQR labels and unified point-of-sale terminals have been deployed at over 500 stalls spread across 10 hawker centres, 22 coffeeshops, and 12 industrial canteens. E-payments usage at these stalls is gradually increasing and four out of five e-payment transactions are via SGQR. While the volume of e-payments is still low compared to cash, we expect it to grow. E-payments are convenient to use at hawker stalls, and payment operators are looking into ways to make it even more convenient for hawkers."

He added that Singapore's efforts in driving the adoption of e-payments across multiple platforms had pushed down the ratio of cash and cheque usage against digital payments. He noted that cheque volumes had dipped by 8% a year over the past three years, while ATM cash withdrawals -- compared to card and FAST payments -- also dropped from 50% to 30%. 

Tharman in parliament earlier this week also provided more clarity on the recourse for individuals who made digital funds transfers to unintended recipients, for instance, when they made typographical errors whilst setting out the e-payment instructions. 

He explained that the bank should help resolve such erroneous transfers by engaging the recipient's bank so that the recipient would be informed and a refund could be initiated. The minister noted that it was an offence under Singapore's Penal Code for recipients to retain or use funds after being informed these were sent by mistake. 

Should recipients refuse to return erroneously transferred monies, senders should make a police report, he said.

On whether banks were required to freeze and automatically return erroneously transferred monies to a sender, Tharman said it would not be "appropriate" to impose such an automatic requirement on banks. 

"First, a bank cannot be sure the sender made a mistake. Second, automatically returning the monies to the sender will run the risk of abuse, and does not encourage more careful use of e-payment and transfers," he noted. "For example, a person who pays for an online purchase could subsequently ask his bank to reverse the payment upon receipt of the goods, claiming that the transaction was in error, and the banks are none the wiser."

He said MAS had released guidelines to address concerns about erroneous transfers, so the interests of e-payments users would be protected. 


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