In today’s digital world, it’s more important than ever for businesses to have fast and easy ways for customers to pay them. The problem is that most of the most popular payment options aren’t compliant with the Payment Systems Licensing (PSL) regulations. If your business uses a non-licensed payment system, it could lead to hefty fines from the Financial Supervisory Authority (FinAA). To avoid this costly scenario, you need to understand which payment systems require licensing and how you can make them compliant. This article will teach you everything you need to know about PSL compliance and how you can make your payment systems compliant in order to stay out of trouble with FinAA.
What is a Payment System License?
A Payment System License is a license issued by the Monetary Authority of Singapore (MAS) for payment systems that process more than S$100,000 worth of funds on a monthly basis. This license is designed to protect consumers and businesses by ensuring the payment systems used are secure and reliable. Payment systems that require a license include credit and debit card networks, internet banking, e-wallets, and mobile payment systems. In addition to these payment systems, any fund transfers that use a remittance network also require a license. Remittance networks are used to transfer money internationally, and they include services like MoneyGram and Western Union. If a payment system doesn’t require a license, it’s known as a payment service. Payment services include things like gift cards and prepaid cards.
What does a Payment System License Entail?
Payment systems that require a license have to comply with a few rules in order to stay compliant. The first rule is that payment systems must use real-time risk management systems (RTRM). RTRM is a system that helps payment systems assess the risk of each transaction and act accordingly. Payment systems are required to comply with RTRM standards so FinAA can access transaction information as needed. The second rule is that payment systems must have strong authentication protocols in place. Authentication protocols ensure only authorized users can access payment systems.
Why is a Payment System License Required?
The main reason payment systems require a license is to ensure they’re compliant with local and international regulations. If payment systems aren’t regulated, then problems could arise with data security, operational procedures, and performance. To prevent these problems, MAS requires payment systems to undergo rigorous testing to make sure they comply with PSL regulations. If a payment system doesn’t require a license, it’s known as a payment service. Payment services typically don’t require a license because they don’t handle large amounts of funds.
Who needs a Payment System License?
Anyone who uses a payment system that processes more than S$100,000 worth of funds on a monthly basis needs a license. Payment systems that require a license include credit and debit card networks, internet banking, e-wallets, and mobile payment systems. In addition to these payment systems, any fund transfers that use a remittance network also require a license. Remittance networks are used to transfer money internationally, and they include services like MoneyGram and Western Union.
MAS Responsibilities with respect to Payments Systems Licensing
As the regulator of payment systems, MAS is responsible for issuing Payment Systems Licenses to businesses that use payment systems. MAS also maintains a centralized database of licensed payment systems so FinAA can track transaction details in real-time. In addition to issuing licenses and maintaining a database, MAS is also responsible for investigating and prosecuting payment systems for non-compliance with PSL regulations. MAS may issue fines for non-compliance with PSL regulations, and these fines can be significant.
Conclusion
In today’s digital world, it’s more important than ever for businesses to have fast and easy ways for customers to pay them. The problem is that most of the most popular payment options aren’t compliant with the Payment Systems Licensing (PSL) regulations. If your business uses a non-licensed payment system, it could lead to hefty fines from the FinAA. To avoid this costly scenario, you need to understand which payment systems require licensing and how you can make them compliant. This article will teach you everything you need to know about PSL compliance and how you can make your payment systems compliant in order to stay out of trouble with the FinAA.
