The introduction of a risk-tiered approach to payment providers is important as it can help to put consumers at ease and accelerate the adoption of e-payments.
Under the new Payment Services Bill, there has been a shift towards a dual-track regulatory framework for payment providers – a major payment institution license and a standard payment institution license (for smaller players). The requirements for both vary in terms of transaction volumes and the daily float for the amount of digital money under the payment institution’s custody. Based on the amount of transaction volume handled per month, a payment provider will be subjected to progressively higher standards of accountability and the corresponding levels of user protection required.
To put things in perspective, the value of e-payments in Singapore has been growing by more than $10 billion a year. The introduction of new business models in e-payments needs to be addressed under the regulatory regime to safeguard consumer interests and regulators need to monitor the space closely to identify any threats to the integrity of their country’s financial infrastructure.
A calibrated but thoughtful touch to regulations will allow smaller payment firms to innovate without excessive red-tape while introducing measures to protect consumers, resulting in a win-win situation for all. More time is needed to finetune the regulatory process but well worth it.