Singapore Seeks To Raise Caps On E-Money Accounts

October 20, 2022
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Singapore is considering new amendments to legislation that would significantly expand the parameters as to how much e-money can be stored and transacted via personal e-wallets.

Singapore is considering new amendments to legislation that would significantly expand the parameters as to how much e-money can be stored and transacted via personal e-wallets.

The Monetary Authority of Singapore (MAS) has published a new consultation paper seeking comments on proposed amendments to the country’s e-money rules.

Based on a survey of e-wallet issuers and feedback from customers, the MAS said that users have benefited significantly from e-wallet products that facilitate lower transaction costs, spending abroad and overseas remittances.

However, at present, e-money issuers are strictly limited as to how much each personal account customer can store and transact using an e-wallet.

Based on the 2019 Payment Services Act (PS Act), personal e-wallets are currently subject to two types of cap: the stock cap; and the flow cap.

The stock cap is the maximum amount of funds that can be held in a personal e-wallet, while the flow cap is the maximum amount of funds that can be transacted from a personal e-wallet over a rolling 12-month period.

To facilitate greater customer convenience and to stimulate further innovation among payments firms, the MAS has proposed that both caps are to be lifted significantly from their current levels.

The stock cap is currently set at S$5,000 ($3,500), but the MAS would like to quadruple it to S$20,000 ($14,000).

Meanwhile, the flow cap is currently set at S$30,000 ($21,000), but the MAS would like to more than triple it to $100,000 ($70,000).

The MAS has given firms until November 25 to submit comments, either anonymously or publicly if they prefer.

The MAS has encouraged licensees and regulated entities under the PS Act, banks, financial institutions and other interested parties (including members of the public and payment service users) to submit comments.

Risks and benefits

In calibrating these proposals, the MAS said it has studied a range of potential downsides to the wider payments industry and financial system, including threats to financial stability.

For example, the MAS noted that lifting the caps could lead to “significant” outflows from bank deposits to non-bank e-wallets.

However, based on scenario projections and historical consumer usage statistics, the MAS said it believes financial stability goals can still be met even with higher proposed caps on e-money accounts.

If the caps are raised, the MAS also suggested that the increase in funds held by or transferred to personal e-wallets could lead to potential losses incurred due to e-wallet scams.

“E-wallet issuers should take this risk into account and assess if their anti-scam controls should be strengthened,” said the MAS.

“In that regard, 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 profiles.”

White-label exemption offered

Given the increased complexity of the e-money landscape if the amendments were to be adopted, the MAS has also proposed that certain exemptions be made for white-label e-wallet account issuers.

Currently, under the PS Act, if a major payment institution (MPI) provides e-wallets to two or more e-money issuers for a single customer, the MPI must aggregate all the e-money in the customer’s e-wallets and apply the caps described above.

However, in its consultation paper, the MAS has proposed that the PS Act be amended so that MPIs in a white-label account issuance agreement will no longer need to aggregate the e-money in e-wallets from different e-money issuers.

So, for example, under the current caps, a customer who had three e-wallets provided by two different e-money issuers could only hold up to S$5,000 across all three e-wallets.

However, under the proposed caps, a customer could hold up to S$20,000 across each e-wallet issuer, regardless of the number of accounts.

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