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INTRODUCTION – PAYMENT SERVICES ACT

The Payment Services Act 2019 (“PS Act”’) which repeals the Payment Services (Oversight) Act (“PSOA”) and the Money-Changing and Remittance Business Act (“MCRBA”), was brought into force on 28 Jan 2020. MAS has also published guidelines on Licensing for Payment Service providers and a frequently asked questions (FAQs) on the act.

Regulators today recognize the integral role of non-banks. In the old days only banks were the only institutions offering financial services. Regulators wanted the act to change the fundamental thinking by introducing activity based regulations. In Europe if they want to lend money out in mortgages only reserved by the banks to do. The rest of the financial services can be performed by companies that meet relevant regulatory requirements. The acts limits on e-wallet for individuals at $5000/- cap on balances and $30,000 cap on annual outflows. The cap do not apply to banks.

Besides, Monetary Authority of Singapore Act (Cap. 186), the following acts are also monitored, regulated and licensed by Monetary Authority of Singapore. Banking Act (Cap. 19) Insurance Act (Cap. 142)

Securities and Futures Act (Cap. 289) Payment Services Act Financial Advisors Act (Cap. 110) Variable Capital Companies Act Trust Companies Act

MAS has provided the useful online resources and the information for the common public to be aware. A list of finance institutions regulated by the MAS and the activities they are authorised to provide can be accessed and verified in their website (eservices.mas.gov.sg).

A list of individuals who conduct activities regulated by MAS and who are issued the licenses can be accessed (www.mas.gov.sg).

A list of persons and entities that are unregulated and may have been wrongly perceived as being licensed or authorised by MAS and the list is available and can be accessed (www.mas.gov.sg/IAL). More than 450 list of companies are in the investor alert list for cautioning the public.

DIGITAL BANKING LICENSES

Digital Banking licenses are going to be issued during the middle of the year 2020, the digital banks which are prevalent in other jurisdictions in the world offer banking services through email, online chat, mobile app, and phone calls and are not having physical branches. A guideline has been issued by MAS under the Banking Ordinance for the licensing requirements and will be issued during the middle of the year, to commence their operations during the next year.

Digital Wallet:
A digital wallet also known as “e-Wallet” refers to an electronic device or online service that allows an individual to make electronic transactions. This can include purchasing items on-line with a computer or using a smartphone to purchase something at a store. Money can be deposited in the digital wallet prior to any transactions or, in other cases, an individual’s bank account can be linked to the digital wallet. Users might also have their driver’s license, health card, loyalty card(s) and other ID documents stored within the wallet. The credentials can be passed to a merchant’s terminal wirelessly via near field communication (NFC). Increasingly, digital wallets are being made not just for basic financial transactions but to also authenticate the holder’s credentials. For example, a digital wallet could verify the age of the buyer to the store while purchasing alcohol. The famous top 10 payment gateway are: Samsung pay, Ali pay, We chat pay, Amazon pay, Google pay, Union pay, Paynow (Singapore).

Type of License:

There are 3 types of licenses issued under the act and they are Money changing license, Standard Payment Institution license (SPI) and Major Payment Institution (MPI). Under the payment services act the following 7 activity types are defined and licenses shall be issued by MAS for carrying out the operations in Singapore. The seven activity types of license are grouped under SPI and MPI and they are Account issuance service, Domestic money transfer service, cross border money transfer service, merchant acquisition service, e-money issuance service, digital payment token service, and money changing service.

Base Capital and Security Capital Requirements:

The base capital requirement under the act for SPI license is $100,000 and for MPI license is $250,000. There are security deposit requirement before obtaining a license and for a MPI license applicant must provide security either in the form of cash or bank guarantee of $100,000 if the average, over a calendar year, of the total value of all payment transactions in one month does not exceed S$6 million for any one payment service and for all other cases $200,000.

Exemption from Applying a License:

A bank licensed under the Banking act, a merchant bank approved as a Financial Institution, a Finance Company licensed under the Finance Companies Act, a person licensed to carry on the business of issuing credit cards or charge cards and any other person or class of persons prescribed by the act are exempted under Sec. 13 of the act from the requirement of a payment service license.

Letter of Responsibility and/or Letter of Undertaking:

Where appropriate, MAS may require applicants to procure a Letter of Responsibility and/or Letter of Undertaking from the applicant’s majority shareholders, parent company and/or related company.

Anti-Money Laundering and Countering the Financing of Terrorism (“AML/CFT”) Requirements:

A license must comply with the AML/CFT requirements as set out in the Notices on the Prevention of Money Laundering and Countering the Financing of Terrorism [PSN01 and/or PSN02] and Notice on Reporting of Suspicious Activities & Incidents of Fraud [PSN03].

Annual Audit Requirements:

A licensee must, on an annual basis, appoint an auditor to carry out an audit of its accounts and transactions, and compliance with regulations and requirements. The licensee must ensure that the auditor submits a report to MAS in Form 4. The applicant must have in place plans to meet the annual audit requirements as set out in section 37 of the PS Act. The auditor must be appointed at the applicant’s own expense to carry out an audit of its accounts and transactions, and compliance with the relevant regulations and requirements.

Applying MAS Guidelines:

Licenses should also understand and apply the relevant MAS Guidelines such as the Guidelines on Technology Risk Management and E-payments User Protection Guidelines, and keep abreast of regulatory changes.

Control of Share Holding in Licensee:

A person must not become a 20% controller of a Licensee without first applying for and obtaining the approval of the authority. The authority will look into the persons’ ability to conduct its business prudently and comply with the provisions of the act, any other written law administered by the authority and is in the public interest. The authority has powers to remove any person for non-compliance or for misconduct under the act.

Approval of CEO, Director or Partner of Licensee:

A licensee incorporated in Singapore must not appoint an individual as its CEO or director or partner unless an application has been made and obtained the approval of the authority. The authority may refuse an application of an applicant if he has been convicted whether in Singapore or elsewhere, an offence involving fraud or dishonesty, has had execution against the individual in respect of a judgement debt or entered into a compromise or scheme of arrangement that is still in operation, has in force against the individual a prohibition order issued while he was a director in a institution that is being wound up by a court or their licenses cancelled or withdrawn by the authority.

Obligation of Operator or Settlement Institution to have place of Business Registered Office:

An operator of a designated payment system and a settlement institution, must establish a permanent place of business or Registered Office in Singapore. The Company, must appoint a person to be present on such days and such hours, to address any queries or complaints from any customer. In the permanent place of business or registered office, the license must keep or cause to be kept books of all the transactions of the business. It is also the duty of the license to inform the change of address to the authority. Section 48 elaborates various circumstances and events if it takes in the company, place must notify the authority as soon as practicable after the occurrence.

Periodic Returns:

A licensee must submit periodic regulatory returns in relation to its payment service activities and are clearly defined in the MAS Notices:

1 INTRODUCTION

The government has taken initiatives to provide grants on various schemes to SMEs to promote innovation, globalization, digitization, automation and productivity improvements. The government departments namely Enterprise Singapore (ESG), Monetary Authority of Singapore (MAS), InfoComm Development Authority (IDA) have jointly provided various schemes to promote the above objectives.

SME centers attached to all the trade associations, with the help and support from the government, extend the above grants to reach all the SMEs in Singapore. You can also visit the above mentioned government departments’ websites to understand in detail the various schemes and the grants available. First we look into the definition of SME in Singapore.

1.1. Definition of SME

The Companies which are incorporated in Singapore enjoy all the tax benefits and incentives offered. When it comes to Enterprise Singapore, Government grants and incentives are concerned, the Company should be a SME to enjoy the benefit.
The definition of SME is as follows:

1. Registered and operating in Singapore
2. Having minimum 30% local shareholding (Singapore citizens and Singapore Permanent Residents) AND
3. (i) Company’s group annual sales turnover not more than SGD 100 Million OR 
(ii) Company’s group employment size not more than 200 staff.

A Company’s Group comprises:
Its direct and indirect [1] holding company [2], traced to the ultimate holding company

[3] and its direct and indirect subsidiaries [4].

[1] – Indirect shareholding refers to the shareholding that is held through another corporation.

• [2]  – Refers to the corporation which holds >50% shareholding of the company.
• [3]  – Refers to the holding company which is not itself a subsidiary of any corporation.
• [4]  – Refers to the corporation with >50% of its shareholding held by the company.

1.1.1. SMEs to get more help on remote working solutions healthcare and education sectors

Those in healthcare, education sectors can get subsidies of upto 80% for adopting approved digital solutions from the productivity solutions grant. The scheme will run until 31st Dec 2020 under IDA and ESG.

1.1.1. SMEs to get more help on remote working solutions healthcare and education sectors

(Cont’ d)

The available solutions include platforms which let healthcare providers conduct video consultations and organize delivering of medicine to patients and leaving management systems which facilitate the creation and delivering of online content. Eligible SMEs that want to adopt to these solutions can apply for subsidies at www.businessgrants.gov.sg

1.1.2. $6M Grant to support Singapore FinTech Firms

MAS, FAS and investment banking firm AMTD have jointly initiated the grant. There are 2 components to the grant and application will open on 18th May 2020 and close on 31st Dec 2021. The first is a business sustenance grant for eligible firms to get upto $20,000 to pay for salaries, rent and daily capital expenditure for the short term. The second is business growth grant which will hand out $40,000 for firm that show proof of concept which demonstrates a plan is workable with financial institutions on the API exchange (APIX) platform. With each subsequent proof of concept a firm will get $10,000 capped at $80,000.

1.2. Temporary Bridging Loan Programme

The temporary bridging loan programme will be available for enterprises across all sectors from April 1. Businesses can take a loan of up to $5 million under the programme, an increase from the previous $ 1 million cap. All eligible enterprises can apply for the programme till March 31 next year.

1.3. SME Working Capital Loan

The SME Working Capital Loan, helps small and medium-sized enterprises (SMEs) in all industries access financing for cash flow. The maximum loan quantum has been raised to $1 million, up from the $600,000 cap.

The Government will work with participating financial institutions to defer principal payments for one year on loans under these two schemes, if businesses ask for it.

1.4. Enterprise Financing Scheme

The Enterprise Financing Scheme – Trade Loan, which supports enterprises in areas like the financing of short-term import and export needs, will be enhanced for one year from April 1. The maximum loan quantum is doubled to $10 million and the Government’s risk- share has been increased to 90 per cent (from 8 April 2020 till 31 Mar 2021, under the Temporary Bridging Loan Programme, Enterprise Financing Scheme – Working Capital Loan, and Enterprise Financing Scheme – Trade Loan). 
The interest rates for loans taken under the programmes are subject to assessments by participating financial institutions. Monetary Authority of Singapore is working with banks and insurers to see how they can help businesses and individuals facing cash flow problems with their loan obligations and insurance premium payments. Details will be announced by the central bank and the industry at a later date.

1.5. Making Companies/Firms more resilient

• Up to 80% of the cost of investing in technology like automation will be covered for firms under the productivity solutions grant.
• Up to 90% under the enterprise development grant, which help firms upgrade, innovate or venture overseas. 
These two enhancements will last till the end of the year.

1.6. SME retailers to start selling online (E-Commerce Booster Package)

• The E-Commerce Booster Package was launched to help small and medium- sized enterprise (SME) retailers which are new to, or have little experience in, e- commerce to diversify their revenue streams beyond the traditional bricks-and- mortar model.
• Retailers can sign up with one of four e-commerce platforms – Amazon, Lazada Singapore, Qoo10 or Shopee – and have 90 per cent of qualifying costs waived.
• The one-time support is capped at $9,000 and the e-commerce platforms will offset their fees directly.
• Qualifying costs refer to the services provided by the platforms, including content development services, product listing and advertising.
• The platform providers will work with retailers to curate and list products for up to six months, participate in promotional campaigns, fulfil orders and analyse sales data.
• Those looking to expand their reach overseas can also tap ESG’s existing Multichannel E- 
Commerce Platform Programme and list their products on overseas marketplaces with 
more qualifying costs covered.
• The ESG booster package will also help SME retailers with their manpower costs. It will 
support 90 per cent of the salary costs of three of their employees for three months.
• New hires and existing employees who are Singaporeans and permanent residents can
• Retailers can sign up for the E-Commerce Booster Package directly with the e- commerce

platforms and solutions providers from now until Sept 30.

1.7.  Work-Life grant 
Work life grant to help firms implement work from home and staggered hours arrangements. Companies can get $2,000/- per worker on daily work from home arrangement for at least a month with a cap of $70,000/- (up to 35 employees you can apply).

1.8.  Self-employment person Income Relief Scheme (SIRS) 
People eligible for SIRS will receive 3 quarterly payouts of $3,000 each with the next two payments in July and Oct 2020. People who do not receive a notification by the end of May 2020 are not automatically eligible and should submit their applications to NTUC. You will get a reply from NTUC within one month and will receive all 3 payments.

1.9.  TR76 – E-commerce transactions – National Standard 
The launch of the new standard Technical Reference 76 (TR 76) will help built trust and transparency in online transactions (Enterprise Singapore and the Singapore Standard Council – both developed it). Businesses can use the guidelines as check list to develop e-commerce policies and communicate clearly to the customers. The guidelines include details on what information merchants need to state regarding their products or services, return and refund policies, as well as payment and shipping policies.

I. INTRODUCTION

The above temporary law was passed in parliament on 7 Apr 2020 due to the urgency and aims to grant temporary relief for six months, and if required may be extended for another 6 months, to those who cannot fulfil contractual obligations, because of the Covid-19 pandemic. The Act’s intention is to provide relief without too much alteration to contractual rights.
The Act was amended again due to the necessity on 5th June 2020. The amendment to the Act was needed to stop the strict enforcement of contractual rights that could damage the economy.
Working of the Act is as follows:

CATEGORIES OF CONTRACTS COVERED BY THE ACT
1. Leases or licences for non-residential immovable property (e.g. factory premises).
2. Construction or supply contracts (e.g. contract for the supply of materials).
3. Event contracts involving the provision of goods and services (e.g. venue or catering for
weddings, business meetings).
4. Tourism-related contracts (e.g. hotel accommodation bookings).
5. Certain secured loan facilities granted by a bank or a finance company to SMEs.
Proposed Relief Period
a. Covers obligations to be performed on or after Feb 1, 2020 and excludes contracts entered into on or after March 25, 2020.
b. Would last six months from the commencement of the Act and may be extended for up to a year from the commencement of the Act.
1. Leases or licences for non-residential immovable property
Rent deferment – Move gives tenants short-term liquidity but doesn’ t mean they don’ t
have to pay rent
• The deferment of rent payment is meant to give tenants breathing space and short-
term liquidity, that it does not mean tenants do not have to pay rent. Those who can
make rental payments must continue to do so.
• The legislation prevents landlords from terminating a lease or commencing legal action because a tenant cannot pay rent.
• The laws provide for disputes to be settled by assessors appointed by the Ministry of
Law.

2. Construction or supply contracts
• For construction contracts or supply contracts, where obligations cannot be performed due to Covid-19, the contractor will not be liable for liquidated damages, nor for delays or non-supply of goods.

3&4. Event contracts involving the provision of goods and services & Tourism-related contracts
Event deposits protected, but need not be refunded at once
• New laws have been passed that will protect deposits for event-and tourism-
related contracts from being forfeited if the booking is affected by the coronavirus
outbreak.

• The Act will cover events that were scheduled to be held on or after Feb 1, such as
wedding banquets, business meetings or conferences. It also includes contracts for
accommodation or entertainment related to tourism. If an event cannot proceed
due to the outbreak, any deposits forfeited will be restored once a claim has been
lodged. Non-compliance would be an offence.

5. Certain secured loan facilities granted by a bank or a finance company to SMEs.
• Under the Bill, if a contractor is not able to perform due to a Covid-19 event
between Feb 1 and the end of the prescribed period, that period should be
disregarded in determining the period of delay in performance. The law also
covers certain types of loan facilities, including secured loans given to small and
medium-sized enterprises (SMEs) with a turnover that does not exceed $100
million in the latest financial year.

• If an SME is unable to repay its instalments due to a Covid-19 event, then some
legal actions cannot be taken against it.

II. TEMPORARY RELIEF FROM CONTRACT OBLIGATIONS HIT BY COVID-19

Relief from bankruptcy
The Debt Repayment Scheme for individuals to avoid being made a bankrupt has been raised from $100,000 to $250,000. This allows more people to enroll in the scheme.
The aim is to protect the vital interests of people by stopping the strict enforcement of certain contractual rights that could damage the whole economy.

If a tenant still cannot pay rent due to the Covid-19 pandemic, the lease cannot be terminated just because he is in arrears. And he also cannot be sued for the rent. This is helping people hit hard by the crisis but it does not mean that all tenants do not have to pay rent. Those who can make payments must continue to do so.

The Bill would grant eligible SME tenants in commercial properties that have suffered a significant revenue drop a total of four months of rental relief. This would be shared equally between the Government and the landlords.

SME tenants in industrial and office properties would also be given some relief in the Bill. It will be disbursed by the Inland Revenue Authority of Singapore to property owners from the end of July. Landlords are required to pass on the benefit to their SME tenants. This should help more SMEs, which account for 72 per cent of employment here, stay afloat.

The new Bill will also cover provisions on temporary relief from onerous contractual terms such as excessive late payment interest or charges. It will also let tenants repay their arrears through instalments.

The Bill will also temporarily raise the monetary threshold for bankruptcy to S$60,000 from S$15,000 usually, and raise that for insolvency to S$100,000 from S$10,000 usually. The statutory period to respond to demands from creditors will be temporarily lengthened to six months, from 21 days usually.

Directors will be temporarily relieved from the obligation to prevent their companies from trading while insolvent, if debts are incurred in the ordinary course of business.

It added that the contractual rights of banks are not affected, other than the right to start legal action for a default on a relevant loan, which is suspended for the six-month period. Banks’ contractual right to charge fees and interest for non-payment or late payment of loan obligations due is unaffected.

Landlords will have to unconditionally pass on their property tax rebate in full to their tenants.

Landlords are given 30% rebate on their property tax paid for the year 2020 in this budget, which will work out to about one month of rent for most properties. Those who fail to do so without reasonable excuse can be fined up to $5,000 under the Act.

Individuals or businesses unable to meet their contractual obligations because of the coronavirus situation and whom want to claim relief must give notice of relief to the other party. If prohibited actions under the law are taken against individuals or businesses despite a notice of relief, it will be an offence punishable with a fine.

Parties that cannot agree can seek help from the law, which will appoint a panel of assessors – professionals from the legal, accounting, financial and other industry sectors – to decide on what would be a just and equitable outcome for both parties.
The process will be fast and will take no more than 5 days at no cost to either party. The final decision by the assessor cannot be appealed against in the court. At the end of the relief period, the individual or business must fulfil the original contractual obligations.

Relief for property buyers with payment problems
The Covid-19 (Temporary Measures) Act, which kicked in on April 20 has been extended to the purchase and lease of homes. Only agreements between home buyers and developers for private housing and the HDB are covered. And these contracts must have been entered into before March 25, with payments due on or after Feb 1. Agreements between individuals are not covered. Home buyers can opt to defer progress payments and down payments to developers and the HDB from Feb 1 until Oct 19.