Author: adric.kam

A transparent and fair regulation framework, vibrant fintech ecosystem and ease of doing business make Singapore the ideal place for fintech companies to set up shops.

In the PwC’s fintech’s state of play report 2022, 31 per cent of fintech companies in Singapore are providing payment-related services. A strong regulatory framework in a highly respectable financial industry, Singapore has positioned itself as the hub for payment and crypto companies. More than 500 applications were submitted when the Payment Services Act (PSA) were in force in 2019 is a testimony that Singapore is a popular destination for these companies.

Electronic money, also known as e-money, is a digital medium of exchange that is represented on an electronic device, such as a smartphone or a prepaid card. E-money offers several benefits, including increased security, convenience, and fast transaction speeds. It has greatly reduced the role of cash in many countries and is expected to replace entirely in the future.

Understanding the Singapore payment license regime

Under the Payment Services Act (PSA) licensing framework, companies are being regulated based on the activities they operate in, and there are seven regulated activities under the Act.

Depending on the applicant’s business plan, they could be regulated for one or more activities under the Act. The seven activities are sufficient to regulate and encourage innovation among the fintech companies. Let’s take a closer look at how each individual license activity helps companies to innovate within the regulated regime in Singapore.

Activity A: Account issuance service

GRAB: Super app for non-bank financial services

Interestingly, MAS does not require licensees to pay any application fees for this licensed activity, but this does not mean that it is not useful to get this activity.

This activity is particularly useful for B2C companies, and one of them would be GRAB. In the GRAB app, users can top-up fiat into their e-wallets in the app as stored value in order to make purchases for GRAB-enabled merchants and services. With this e-wallet, it allows users the convenience of topping up Fiat and using them to pay for goods and services with the click of a button.

Activity B and C: Domestic and cross-border money transfer services

Transfer Wise: Transferring funds anywhere, anytime

These activities are the most common activities that most payment companies will be using as part of their businesses. In short, these activities simply mean how your company transfers funds (i.e. Fiat) to other entities.

If it is within Singapore (e.g. transferring of funds to a local supplier in Singapore) and if the fund transfer is outside of Singapore, it would likely fall under cross-border money transfer service.

A quick check on the Monetary Authority of Singapore (MAS) website, you can see that cross-border money transfer activity is the most licensed activity among the rest, which is rightfully so given the nature of payment companies being globally focused.

Transfer Wise, an international payment company, is an example of how they have both domestic and cross-border money transfer services to allow their users to transfer funds locally and to other countries.

Activity D: Merchant acquisition service-empowering merchants to grow their business

Merchant acquisition is the most familiar with local merchants and one of the most frequently used activities by local merchants. The POS machines that you see at shopping malls that allow merchants to receive payment via credit cards are a good example of the use of merchant acquisition.

Activity E: Issuance of e-money

StraitsX: Project Orchid

During the recent Singapore FinTech Festival (SFF), StraitsX, for Project Orchid, launched a purpose-bound e-money where participants could download the e-money voucher at the exhibition to redeem it at participating partners.

Such a use case would require the entity to have the license to conduct account issuance and issuance of e-money activities. Below is the flow of wrapped xSGD offered by Xfers under Project Orchid during this year’s SFF.

Apart from StraitsX, Grab and Temasek, other supporting partners include ADDX, AltLayer, Automata, Coinbase Wallet, dtcpay, Fomopay, Sequence, TripleA, Trust Wallet and VISA.

Activity F: Digital payment tokens

dtcpay: Digital asset services

When the Payment Services Act (PSA) was launched in 2019, it created an international buzz because of this particular activity that will be licensed under the Act. Digital Payment Tokens (DPTs) or commonly known as cryptocurrency, made Singapore one of the pioneers in regulating cryptocurrency at that time.

It is worthwhile to note that this activity is also one of the most sought-after since only 11 entities have obtained this licensed activity (as of December 2022), with many applicants still waiting or having already withdrawn their license applications.

Other than the usual crypto exchanges in the likes of Independent Reserves, Coinhako, there are also stablecoins issuers such as Circle and Paxos as well as crypto payment players like Digital Treasures Centre that have thus far received this licensed activity from MAS.

Crypto payment company like dtcpay empowers merchants to accept crypto as payment and assist them in converting it into fiat for settlement. It allows merchants to open up to new customer segments, such as crypto natives, to grow their businesses. Such an innovative use case is one of the key competitive advantages of having this licensed activity.

Finding the right strategic partner for sustainable growth

Having a responsible business in a regulated country, especially one that is well respected internationally, like Singapore, helps build trust and confidence among its customers and investors. This helps them to grow in a sustainable manner.

Many fintech companies might have products that could disrupt industries but are lacking in compliance and regulatory experience. And that’s where they could partner with experienced licensed entities such as dtcpay to work on growing the products while ensuring that they meet the regulatory requirements.

Such strategic partnership also helps to uplift the industry as a whole to become a more responsible and sustainable business model. Interestingly, dtcpay is one of the two companies (as of December 2022) that have obtained the six activities listed above, giving dtcpay and its partners the competitive advantage to scale and launch new products quickly in Singapore.

If you are looking for a strategic partner in Singapore, dtcpay can provide the expertise and experience to assist you in building your presence in Singapore.

Consumers in the SEA already demonstrate a high willingness to use mobile payments and exceed the global average when self-reporting their participation in mobile banking activities. For example, more than half of them have paid a bill or checked their bank account balance on their mobile phone.

There has also been a leap in the adoption of alternative payment methods in Southeast Asia since the recent pandemic. In a recent report by BCG, 30% of Southeast Asian consumers have reduced their use of traditional payment methods, in an attempt to reduce physical contact. In addition, digital payments in Asia are forecast to exceed US$350 billion by 2026 according to Seamless Asia. 

Electronic money, also known as e-money, is a digital medium of exchange that is represented on an electronic device, such as a smartphone or a prepaid card. E-money offers several benefits, including increased security, convenience, and fast transaction speeds. It has greatly reduced the role of cash in many countries and is expected to replace entirely in the future.

Benefits of e-money

Security

E-money is considered more secure than cash because it cannot be lost, and it is less vulnerable to theft. Encryption technology, customer authentication technologies, and regulatory standards ensure that e-money remains secure on the web. Service providers are also required to comply with KYC, anti-fraud, anti-risk, and AML regulations to prevent theft of identity and other cybercrimes.

Convenience

Paying online has become the domain of electronic money– and it has for good reasons. Choosing prepayment via bank transfer as the payment method for online shopping ends in trips to banking branches or your bank’s often convoluted online banking platform. For payment on an online platform, you simply choose your e-wallet as the payment option and buy with just 1 click. It’s literally like opening your wallet and handing over cash, except digitally.

Fast Transactions

In addition, e-money offers fast transaction speeds, with transactions at points of sale or in online shops occurring instantly. Online transfers between payers’ and payees’ accounts are considerably faster than wire transfers, taking only minutes instead of several days.

dtcpay Launched eSGD Pilot Program 

dtcpay, a licensed and regulated payment solutions provider, has recently launched an e-money pilot program.

The purpose of this e-money pilot program is to provide a secure and convenient payment option for merchants and their customers. With the increasing demand for cashless transactions, e-money has become an essential part of the payment landscape. dtcpay aims to simplify the payment process for merchants and customers alike, providing a seamless experience for all parties involved. 

By participating in this pilot program, merchants can offer their customers a range of benefits such as faster and more secure transactions, reduced costs, and enhanced convenience. dtcpay’s e-money solution is designed to help merchants to grow their business by providing efficient and reliable alternative payment solutions.

This program is designed for selected merchants who wish to participate in the e-money payment system. Merchants who are interested in joining this program can reach out to dtcpay for further information. 

dtcpay’s e-money pilot program is a significant step forward in the evolution of payment solutions. It represents an exciting opportunity for merchants to embrace the digital economy and reap the benefits of a modern payment system.