25 October 2022
On 18 October 2022, the Monetary Authority of Singapore (“MAS”) issued a consultation paper seeking feedback on proposed amendments to limits currently imposed on personal payment accounts that contain e‑money (“e-wallets”) issued by major payment institutions (“MPIs”). The consultation closes on 25 November 2022.
The proposed amendments include:
- an increase in the stock cap and flow cap on personal e-wallets; and
- an exemption for “white-label” e-wallet account issuance.
Increase in stock cap and flow cap on personal e-wallets
The Payment Service Act 2019 (“PS Act”) currently imposes the following limits on each e-wallet issued by MPIs:
- the maximum amount of funds that can be held at any given time is set at S$5,000 (“stock cap”); and
- the maximum total outflow over a rolling 12-month period is capped at S$30,000 (“flow cap”).
To facilitate specific user needs, there are exemptions to the stock cap and flow cap (collectively, “caps”). Specifically, (1) users are allowed to load more than S$5,000 into their e-wallets on an intra-day basis, provided the end-of-day balance is below S$5,000; and (2) funds transferred into the user’s own or designated local bank accounts, or to his or her own overseas bank account, are excluded from being counted towards the flow cap.
Where a user has multiple accounts with the same MPI, all of his or her accounts will need to be aggregated for the purposes of complying with the caps.
The caps are in place to ensure continued stability of the financial system.
MAS observes that payment service users have benefitted from e-wallet issuers’ product offerings, such as e-wallet products that facilitate travel spending and overseas remittance, and lower transaction costs offered by some e-wallet issuers.
To facilitate greater customer convenience and innovation in the e-payments landscape, MAS proposes to:
- raise the stock cap from S$5,000 to S$20,000; and
- raise the flow cap from S$30,000 to S$100,000.
MAS states that even with the proposed higher caps, scenario projections based on historical consumer usage statistics indicate that the financial stability objectives can still be met.
MAS notes that raising the caps could increase funds held or transferred through personal e-wallets and consequently potential losses incurred through scams that involve e-wallets. E-wallet issuers should take this risk into account and assess if their anti-scam controls should be strengthened.
Exemption for “white-label” e-wallet account issuance
Under section 24(1)(c) of the PS Act, an MPI that issues two or more e-wallets to any payment service user must aggregate all the e-money in the e-wallets issued to that payment service user and apply the caps in section 24(1)(c)(i) and 24(1)(c)(ii).
MAS has reviewed feedback from MPIs which are exploring entering into arrangements with e-money issuance service providers (“e-money issuers”; such an arrangement an “e-money account issuance service”), where:
- the MPI will issue e-wallets on behalf of the e-money issuers; and
- the e-wallets will store e-money issued by the e-money issuers to their payment service users.
MAS proposes to amend the Payment Services Regulations 2019 to exempt an MPI that is in an arrangement to provide an e-money account issuance service to two or more e-money issuers (“white-label account issuance arrangement”) from section 24(1)(c) of the PS Act. With this change, the MPI will not be required to aggregate the e-money in e-wallets issued to the same payment service user under the white-label account issuance arrangement, for the purposes of applying the caps. To avoid doubt, if an MPI issues two or more e-wallets to a payment service user on behalf of a single e-money issuer, the MPI needs to aggregate the e-money in the two or more e-wallets issued to that payment service user for the purposes of applying the caps.