Procedure for getting a payment license in Singapore

The possibility of getting a license allowing working in the field of rendering payment services in a particular jurisdiction has recently attracted more and more interest. In particular, this also applies to Singapore. However, as a rule, there is no available and clearly marked information regarding the licensing procedure in the Singapore jurisdiction. Below are the basic rules for obtaining a license.

January 2019 was marked by the fact that then the Payment Services Act came into force. This act aims to introduce regulation of service providers working with online payments, including those that are carried out using cryptocurrencies. The provisions of the new law allow payment systems and businesses related to cryptocurrencies to register and conduct their activities in the country, thereby creating a path to the legalization of these structures and opening up good opportunities for cryptocurrency firms.

Who the new regulation applies for?

The legislative act regulating the field of payment services clearly outlined the legal basis for firms working with money transfers, virtual wallets, cryptocurrency funds involved in the exchange of money, in particular for crypto exchanges. Law divides these services into the following several categories:

• Operations with cryptocurrency (or digital tokens) – Digital Payment Token – DPT
• Implementation of money transfers within the country
• Payment processing services
• Release of electronic wallets
• Exchange of funds

The services of digital tokens, which were first introduced in Singapore, are of the greatest interest to cryptocurrency companies. This category includes all operations that can be carried out using tokens, that is, cryptocurrencies:

• sale;
• exchange operations;
• purchase;
• transfer of cryptocurrency;

The provisions of the new law also formulated 3 types of licenses for firms that would like to work in the provision of such services.

Types of licenses

There are 3 types of licenses for firms that intend to operate in the provision of services for the processing of payment transactions related to virtual money, and the like in Singapore.

Licenses are divided into 3 classes:

• License for exchange of money – Money Changing License. This type of license is suitable for firms that intend to provide services only for the exchange of funds, for example, services for the purchase or sale of foreign currencies.
• Standard type license – Standard Payment Institution (SPI).
• License for Major Payment Institution (MPI) – this provides the same options for companies that the standard license provides. The only difference is that these possibilities are not limited by such limits as the number of transactions not exceeding 3 million SGD for payment transactions per month, etc.

For most providers, the preferred type of license is the Major Payment Institution License, according to which the company is not limited in terms of turnover.

The following commercial areas are covered by this license:

• internal transfers of funds;
• opening accounts;
• cross-border money transfers;
• issue of electronic currency;
• merchant account services;
• operations for the exchange and sale of cryptocurrencies (digital tokens).

Many of their well-known payment providers, including Western Union, Revolut, Alipay, have received a Major Payment Institution license in Singapore. Now, 145 providers have officially received Major Payment Institution licenses in the Singapore jurisdiction and 3 have SPIs.

Procedure for getting a license

To obtain a payment license in Singapore, you will need to do the following.

1. Register a company in Singapore.

The organization must be either foreign, but registered within Singapore, or local.

If your company has less than 50 shareholders, it would be more expedient for you to register a Private Limited Company – a company with a limited type of liability. The company is entitled to enjoy all the benefits that are provided to small businesses in Singapore, in particular, the company is partially exempt from paying income tax.

It is not difficult to open a company in the Singapore jurisdiction. To do this, you will need a standard package of the following documents:

• A copy of the passport of each member of the company.
• A document that confirms the address of residence of each of the participants.
• A resume that would include contact details.
• Brief description of the business

2. Commercial activities.

Singapore must have a registered office or permanent place of business.

The company is not required to have a headquarters. Only a branch can be registered.

In addition, we note that, as such, there are no requirements regarding the substation, that is, the company can use a virtual office or a registration address.

3. Executive Director.

The executive director can be a permanent resident or a citizen of Singapore. In this case, it will be enough for the company to have 1 such director. In addition, a foreign person with a work permit can act as an executive director. Then the company must hire another non-executive director who would be a citizen or permanent resident of Singapore.

The executive director must have the appropriate qualifications or experience in the financial sector, such as would be sufficient to obtain a license.

Foreign specialists work in Singapore based on a work permit. You can get such a document from a company that is registered in the Singapore jurisdiction.

The minimum requirement is to have the appropriate qualifications and a minimum wage of at least $ 4.5 thousand per month. In fact, executives of foreign firms in Singapore receive at least 7 thousand in local currency per month.

If the company has 2 or 2+ directors, then the executive directors have the responsibility to carry out activities on a daily basis, and the non-executive directors are responsible for providing general supervision over the operation of the enterprise.

4. Capital

The minimum start-up capital is $ 100,000 for SPI licenses and $ 250,000 for MPI. This completes the basic requirements for obtaining a payment license in the Singapore jurisdiction, but there are a number of additional factors that will also be considered by the regulator.

• Decency and professional suitability of directors and controllers of the company.
• Experience and qualifications of management personnel.
• Service record of the organization, financial condition.
• Model and business plan, in particular the operational readiness of the company.
• Ability to fulfill the obligations set out in the Law on Payment Services.
• Whether obtaining a license by the company will serve the public interest and meet the needs of the population.