MAS issues response to feedback received from public consultation on proposed amendments to limits on personal payment accounts that contain e-money
On 7 July 2023, the Monetary Authority of Singapore (“MAS”) issued its response to feedback received from the public consultation on proposed amendments to limits imposed on personal payment accounts that contain e‑money (“e-wallets”) issued by major payment institutions (“MPIs”). A majority of the respondents were supportive of the proposals. According to MAS, the proposals are expected to be implemented by the second half of 2023.
Between 18 October 2022 and 25 November 2022, MAS sought comments on the following proposals:
- To raise the maximum amount of funds that can be held at any given time (“stock cap”) in each e-wallet, from S$5,000 to S$20,000;
- To raise the maximum total outflow over a rolling 12-month period (“flow cap”) from each e-wallet, from S$30,000 to S$100,000; and
- To exempt MPIs in a white-label issuance arrangement from section 24(1)(c) of the Payment Services Act 2019 (“PS Act”) (“WLA exemption”). Under the WLA exemption, an MPI need not aggregate the e-money in e-wallets issued to the same payment service user (“user”), where the e-wallets are issued on behalf of, and store e-money issued by different e-money issuance service providers (“e-money issuers”). A white-label issuance arrangement comprises: (i) MPI issuing e-wallets on behalf of one or more e-money issuers; and (ii) the e-wallets storing e-money issued by the e-money issuers to their users.
For more information about the public consultation, please refer to our previous article titled “MAS consults on proposed amendments to limits on personal payment accounts that contain e-money”.
Proposed revision to caps on personal e-wallets
A majority of the respondents supported the proposals to raise the stock cap to S$20,000, and the flow cap to S$100,000.
Rationale for higher caps
A few respondents asked if the existing caps were already sufficient to meet the needs of most users. In its response, MAS explained that a review it conducted found that there was demand for higher caps, which would facilitate greater customer convenience and innovation in the e-payments landscape.
Respondents also noted that the benefits from the proposed caps may outweigh the additional scams and fraud risks that could arise. In this regard, MAS expects payment service providers to implement robust anti-scam controls commensurate with their respective business risks, in particular controls to address risks arising from the implementation of the revised caps. MAS is working with the industry on the specifics of these controls and aims to finalise these in the next few months.
Caps to be determined by individual MPIs that issue e-wallets
Several respondents suggested that MAS allow e-wallet issuers to either (i) benefit from higher caps where their risk control measures are assessed to be more robust; or (ii) set their own caps in relation to their risk appetite/risk management framework, and/or be able to “adjust” the caps for each user depending on user sophistication or preference. In response, MAS informed that in calibrating the proposed caps, MAS took a holistic view of the e-payments landscape and has assessed that the proposed revised caps, which are substantial increases from current levels, will be sufficient in meeting the diverse needs of consumers without compromising on financial stability. MAS will continue to monitor how the industry and consumer needs evolve, and consider further changes to the caps in future, as necessary. E-wallet providers may still set caps below the maximum stock cap of S$20,000 and flow cap of S$100,000.
Foreign-denominated currencies held in e-wallets
There was a suggestion for MAS to consider exempting the need for foreign-denominated currencies held in e-wallets to be counted towards the caps, as foreign funds may not significantly represent outflows from local bank deposits. In response, MAS states that all currencies will continue to count towards the caps and that excluding all foreign currencies from the caps would pose risk of policy circumvention, as users may opt to transact with foreign currencies even where there is no need to do so. MAS will continue to review the caps if there are future use cases that should be accommodated.
Proposed WLA exemption
Most of the respondents supported the proposals for WLA exemption.
MAS notes that there is a diversity of potential white-label account issuance arrangements which may not be addressed by a class exemption from section 24(1)(c) of the PS Act and states that MPIs that wish to be exempted should apply to MAS for the exemption. Pursuant to section 100(4) of the PS Act, MAS will review such applications on a case-by-case basis, taking into account considerations which include but are not limited to the following:
- the structure of the white-label account issuance arrangement including whether there are operational safeguards in place to keep the e-monies in the same or across different e-wallets distinct; and
- whether the MPI has clearly disclosed or will clearly disclose the respective responsibilities of the MPI vis-à-vis the e-money issuer(s) to users, and has in place the relevant controls to track each user’s holdings and spending of each type of e-money held in e-wallets issued by the MPI against the caps.
Scope of proposed amendments clarified
In its response, MAS clarified that the proposed amendments are specific to the e-wallet caps and do not override or replace any other current requirements imposed on MPIs that issue e-wallets, including rules relating to anti-money laundering and combatting the financing of terrorism and user protection/safeguarding.
Reference materials
The response is available on the relevant webpage of the MAS website www.mas.gov.sg.