Singapore grants non-banks access to e-payments infrastructure

By on 03/12/2020
The director of the Monetary Authority of Singapore hailed the news as a major e-payments milestone. Credit: Monetary Authority of Singapore

Singapore’s central bank is opening up its retail payments infrastructure to non-banks from February 2021 to simplify e-payments for consumers and businesses.

The Monetary Authority of Singapore (MAS) announced on Monday that non-bank financial institutions (NFIs) licenced as “major payment institutions” under Singapore’s Payment Services Act will be eligible. This means they have passed checks in areas such as risk management and anti-money laundering procedures.

NFIs will be able to connect to two fund-transfer services, Fast and Secure Transfers (FAST) and PayNow. FAST enables customers of its 23 participating banks to transfer Singapore dollars from one entity to another instantly. Meanwhile, PayNow, which has nine participant banks, allows consumers and businesses to make instant payments across accounts using a proxy such as a mobile-phone number or a national registration identification card.

Ravi Menon, managing director of MAS said, said the move was a “major milestone for e-payments in Singapore.” He added: “Adoption of e-payments will become even simpler for individuals and businesses.”

Simplifying the system

Currently, most “e-wallets” require a debit or credit cards to top-up funds and users cannot make transfers between them. But the move will enable consumers who use licenced e-wallets to make real-time fund transfers between bank accounts and e-wallets, as well as between different e-wallets.

It will also allow businesses that use the banks signed up to FAST and PayNow to receive real-time payments from other users of e-wallets or mobile-banking applications that join the fund-transfer services. E-wallets that have “traditionally been closed-loop ecosystems” will also benefit from this capability.

“Direct access by NFIs to FAST and PayNow closes the last-mile gap in Singapore’s e-payments journey,” said Menon. “Consumers who may not have ready access to debit or credit cards to fund their e-wallets will now have the option to do so directly through their bank accounts. Our vision to enable complete real-time payments interoperability will now become a reality.”

Ong Ai-Boon, director of The Association of Banks in Singapore, a membership organisation that represents the interests of the commercial and investment banking sector, said: “FAST and PayNow adoption rates have exceeded expectations and we are confident that the addition of new players will help accelerate the national path towards a less-cash economy.”

Singapore preparing for fintech festival

Singapore is currently gearing up for the Singapore Fintech Festival, which will run from 7 to 11 December. It is known as the SFF x Singapore Week of Innovation & TeCHnology or “SFF x SWITCH 2020”.

Last week MAS announced the 20 finalists for the 2020 “Global Fintech Hackcelerator”, which forms part of the festival. This year’s finalists have developed innovations that seek to drive social and environmental impact within the financial sector in response to COVID-19 and climate change.

Each finalist will pitch at the demo day on December 10. They were selected through two parallel segments – a local programme, which addressed problems collated from Singapore’s financial sector, and an international programme. Three winners will each secure S$50,000 (about US$36,800).


SINGAPORE’S E-PAYMENTS INFRASTRUCTURE EXPLAINED

MAS announced that it was looking to enable direct access to FAST and PayNow for licenced NFIs in September 2018. At the time, Ong Ye Kung was a MAS board member and minister for education. He used a real-life example to explain the plans:

“We are not done building the e-payment infrastructure. While the important components were built around the banking industry, we need to ensure that the system architecture is open and accessible. This is important, because it ensures new players, including fintech companies and other non-bank players, can enter the industry and join the e-payment fraternity.

“The system is, however, not totally open and accessible yet. Let me give an example. Sport Singapore has a very popular and useful app called “Active Wallet”, because you can use it to book ActiveSG sports facilities. So hundreds of thousands of Singaporeans are on it regularly.


“There are a few ways you can top up your Active Wallet. You can use a debit or credit card, or link your… bank accounts (where you even have the choice of auto top-ups). Or you can go to any ActiveSG Sport Centre to top up your Active Wallet.


“But the current way to top up from bank accounts is limited as it depends on whether each bank enables this feature. If we allow Sport Singapore to access FAST, you will be able top up your Active Wallet from any bank account through a FAST transfer.

About Ian Hall

Ian is editor of Global Government Fintech a sister publication to Global Government Forum. Ian also writes for media including City AM and #DisruptionBanking. He is former UK director for the pan-European media network Euractiv (2011-2018), editor of Public Affairs News (2007-2011) and news editor of PR Week (2000-2007). He was shortlisted for ‘Editor of the Year’ at the British Society of Magazine Editors (BSME) Awards in 2010. He began his career in Bulgaria at English-language weekly the Sofia Echo. Ian has an MA in Urban and Regional Change in Europe and a BA in Economics, both from Durham University.

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