The Monetary Authority of Singapore (MAS) said it plans to "consolidate" existing legislation that applies to payment systems, stored value facilities and remittance businesses and create a new combined "activity and risk-based regulatory framework".
The changes will account for a "blurring" of the lines between remittance and payments brought about by advances in technology, including financial technology, it said.
"A more calibrated regulatory regime, applied on an activity basis to payment service providers, rather than specific payment systems, would allow MAS to better address specific issues such as consumer protection, access and corporate governance," MAS said. "It would also give MAS the flexibility to address emerging risks such as cyber security, interoperability, technology, and money laundering and terrorism financing. It is envisioned that activity-based regulation of payment service providers would build public confidence and encourage the use of electronic payments."
Whilst businesses will have to apply to carry out specific payment-related activities under the new framework, the new regulatory regime will no longer require firms to obtain "multiple licences" to conduct those activities, MAS said. Different payment activities include issuing, acquiring, operating payment platforms, account aggregation and storing funds on digital wallets.
Technology law expert Bryan Tan of Pinsent Masons MPillay, the Singapore joint venture partner of Pinsent Masons, the law firm behind Out-Law.com, said: "A harmonised payments regulatory framework would be very much welcome as each regulated area has developed on its own, resulting in some anxiety from multi-use e-wallet providers. It would also provide regulatory parity between products."
A new National Payments Council (NPC) will be established in Singapore as part of the proposed reforms, MAS said. It said the NPC's role will be "to foster innovation, competition and collaboration in the payments industry" and "serve as a forum where stakeholders from both the supply-side and demand-side of the payments ecosystem can be heard". MAS said it will look to the NPC to address issues such as interoperability and the development of common industry standards.
"MAS expects the NPC to coordinate and drive strategic changes which are aligned to the economy and national initiatives," MAS said. This includes payment-related initiatives that align with the Singapore government's 'smart nation' plans, it said.
MAS deputy managing director, Jacqueline Loh, said: "Payments is one of the key components of fintech and serves as a foundation for our vision of a smart financial centre. This public consultation is an important step for MAS and the payments industry to co-create the future of Singapore’s payments landscape; one where payments are swift, simple, and secure, supported by streamlined regulation and inclusive governance."
Separately, MAS also announced the opening of a new 'fintech innovation lab'. The centre, named 'Looking Glass @ MAS', has been established to help businesses and MAS to test financial technology innovations and allow start-ups to consult with industry experts on "legal, regulation, and business-related matters", for example.
The facility, which is located within MAS headquarters, will also "provide a venue for relevant training sessions and networking activities for the fintech community", it said.
"MAS has been encouraging financial institutions to anchor their innovation labs in Singapore," said Sopnendu Mohanty, chief fintech officer at MAS. "We are pleased to open our own fintech innovation lab, underscoring MAS’ commitment to promoting a culture of innovation in the financial sector. Looking Glass @ MAS will serve as a platform for the fintech community to connect, collaborate, and co-create with one another."
In June, MAS proposed a 'regulatory sandbox' that aims to allow financial services firms, technology companies and other "non-financial players" in Singapore to test new financial technology products and services in an environment where some regulatory requirements are relaxed.
A 'fintech bridge' between the UK and Singapore was announced in May. The deal will involve the sharing and use of information on "financial services innovation" by the UK's Financial Conduct Authority (FCA) and MAS.
As part of the deal, the FCA and MAS have put in place a "regulatory cooperation agreement". The agreement is designed to help companies win authorisation for new financial technology products, services and business models in both jurisdictions.