Offering an E-Wallet in Singapore? Here’s What the Law Expects from You
- Eastern Mezzanine
- May 5
- 5 min read
Updated: Jul 14
Summary
Launching Your E-Wallet in Singapore? Know the Law: Get a comprehensive overview of the legal and regulatory requirements for offering e-wallet services in Singapore, as governed by the Payment Services Act (PSA).
Compliance with MAS Regulations for Stored Value Facilities (SVFs): Understand how e-wallets are classified as Stored Value Facilities (SVFs) and the specific compliance obligations, including Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) safeguards.
Licensing Your E-Wallet Business: Determine the appropriate license for your e-wallet service, whether it's a Standard Payment Institution (SPI) or Major Payment Institution (MPI) license, and navigate the application process with the Monetary Authority of Singapore (MAS).
It was not that long ago when cash dominated Singapore’s payments landscape. Today, digital payments reign supreme. Amongst these, e-wallets have rapidly emerged as a top choice for both retail consumers and businesses alike. Convenient and ubiquitous, e-wallet penetration rates in Singapore are projected to spike from 30.4% in 2020 to 94.7% in 2025.
It comes as no surprise, then, that everyone wants a share of the e-wallet pie in Singapore. Fintechs like Grab and Fave aside, even major banks like DBS have devised e-wallets in response to the burgeoning demand for the technology. And if you are looking to get your share of the pie, the time is ripe.
But before you go to market with your shiny new app, you must ensure it is fully compliant with local legislation. Predominantly governed by the Monetary Authority of Singapore (MAS) under the Payment Services Act (PSA), e-wallets must adhere to a specific set of regulations before they can be launched for public use.
Understanding the Payment Services Act (PSA): The foundation of your e-wallet
The PSA underwrites every payment service operating within Singapore, and e-wallets naturally fall under its purview. Under the PSA, e-wallets are classified as account issuance services, enabling users to open and maintain an account through which they can hold "e-money"—electronically stored monetary value paid in advance—and execute payment transactions.
This often corresponds to what MAS defines as a Stored Value Facility (SVF), or a platform through which payments can be made for goods and services up to its stored value. Operating such services places your business squarely within the regulatory purview of MAS. This means you are required to apply for a PSA license to operate legally in Singapore.
Applying for a license for your e-wallet business
Under the PSA, there are three main types of licenses: the money-changing, Standard Payment Institution (SPI), and Major Payment Institution (MPI) licenses.
You need to get a money-changing license if you intend to add money-changing services to your e-wallet. This is especially relevant if you intend to give your customers the flexibility to perform in-app currency conversions.
As for the SPI and MPI licenses, the scale of your operations determines which one you should apply for. For starters, you need to apply for an SPI license if your e-wallet operations fall within the following thresholds:
Total value of payment transactions for one payment service in a month: ≤ $3 million
Total value of payment transactions for two or more payment services in a month: ≤ $6 million
Average daily e-money float: ≤ $5 million
Minimum initial and ongoing financial requirements (for Singapore-incorporated businesses): Base capital of at least $100,000
Net head office funds (for foreign businesses): At least $100,000
If your e-wallet operates on a larger scale beyond SPI thresholds, you require an MPI license. As a general rule of thumb, MAS does not impose restrictions on payment transaction flows or thresholds for MPI holders. Instead, you need to meet the following initial and ongoing financial requirements:
Singapore-incorporated MPI: Base capital of at least $250,000
Foreign company: Net head office funds of at least $250,000
MPI holders must also maintain a security deposit to protect customers’ money. Depending on the value of your transactions, the minimum security deposit will differ:
Value of transactions is ≤ $6 million: Security deposit of $100,000
Value of transactions is > $6 million: Security deposit of $200,000
Learn more about the PSA’s licensing requirements here: Who’s Licensed, and How: A Breakdown of Payment Services Licences in Singapore
Key obligations to fulfil when your e-wallet is licensed
The license application process itself is rigorous, which comes with other key requirements that predominantly revolve around protecting your customers’ interests and funds. They are detailed as follows:
Set up anti-money laundering (AML) and countering the financing of terrorism (CFT) safeguards
As per Notice PSN01 dated April 2024, MAS places immense emphasis on AML/CFT safeguards, requiring all payment service providers to implement robust policies, procedures, and controls, including thorough Know Your Customer (KYC) and customer due diligence (CDD) processes when onboarding users. PSN01 is very similar to PSN02 (as summarised in our article on crypto gateways), encompassing the following requirements:
Measure | Requirement |
Risk assessment and risk mitigation | Identify, assess, and understand Money Laundering (ML) and Terrorism Financing (TF) risks. |
Customer due diligence (CDD) | Perform CDD measures to "Know Your Customer" (KYC). |
Reliance on third parties | Payment service providers are allowed to engage eligible third parties to perform elements of the CDD process. |
Correspondent accounts and wire transfers | Address risks associated with cross-border relationships and transactions. |
Record keeping | Maintain adequate records of all relevant data. |
Suspicious transaction reporting (STR) | Implement measures to identify and report suspicious transactions. |
Internal policies, compliance, audit, and training | Establish a robust, AML/CFT-compliant internal framework. |
This is a summary of the Notice PSN01. For full details, please refer to the document on MAS’s website.
Protect your customers’ funds
With your AML/CFT measures in place, the next step is to implement proper safeguarding mechanisms. By doing so, you not only comply with MAS regulations but also build and maintain user trust.
Given that the e-money held in users' wallets belongs to them, MAS mandates that you protect these funds from potential insolvency risks. If you are an MPI licensee, you will need to safeguard your customers’ funds via:
An undertaking from a bank in Singapore, a merchant bank, or a licensed finance company
A guarantee from a bank in Singapore, a merchant bank, a licensed finance company, or a financial guarantee insurer
A deposit in a trust account held with a bank, merchant bank, or licensed finance company
Safeguarding in other ways as prescribed by MAS
If you hold an SPI license, you are exempt from this obligation as MAS views the smaller volume of your payment transactions as being less risky to your customers’ funds.
Set up technology risk management systems
In addition to protecting your customers’ funds, you will need to further shore up your e-wallet’s defenses with technology risk management (TRM) and cyber hygiene measures. In this regard, you are expected to build a platform that is secure, reliable, resilient to cyber threats, and capable of maintaining service availability. This encompasses strong authentication methods, data encryption, regular security audits, penetration testing, and comprehensive incident response plans.
Level up your e-wallet compliance with Eastern Mezzanine
Given the dizzying number of rules you need to comply with, launching your e-wallet solution in Singapore can be tricky business.
Eastern Mezzanine is here to help. Our team of legal counsels are equipped with deep expertise in payment services, and this includes specific regulations for the creation and management of e-wallet services.
Our dedicated team will guide you through the license application process and fulfil all necessary obligations, ensuring your business stays compliant with MAS and the PSA’s regulations.
