Singapore to open payment rails to selected non-bank financial firms from February

Singapore

SINGAPORE is opening up access to the payment rails once held sacred by only the banking industry.

This levels the playing field for non-bank e-wallet players that meet the necessary risk-management standards to secure network access, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), told The Business Times.

Eligible non-bank financial institutions (NFIs) will, from February 2021, have direct access to the banking system's real-time retail payments infrastructure, MAS said on Monday. This will give non-bank players - major payment institutions under the Payment Services Act - access to payment rails for them to offer PayNow services.

The access is via FAST, Singapore's round-the-clock electronic funds transfer service through which participating entities facilitate instant transfers of Singapore dollar funds between customers.

There are currently 23 entities offering FAST services, and nine banks offering PayNow.

A NEWSLETTER FOR YOU

Friday, 8.30 am

SGSME

Get updates on Singapore's SME community, along with profiles, news and tips.

Sign Up

The Direct FAST Working Group includes the NFIs of Grab Financial Group, Liquid Group, MatchMove, Razer Fintech, Singtel Dash and TransferWise.

In a recent interview with BT, Mr Menon said MAS' view is that the payments network is like a utility that exists to serve all customers.

"Whether you choose a bank app or a non-bank wallet, you should be equally served by that network."

He added that direct access to the FAST network removes the cost and friction involved for bank e-wallet providers to go through the banking system.

But participating NFIs must meet threshold standards of risk management, including in technology risk management, and anti-money laundering standards.

"We will hold all players on the network to the same standard. Non-bank access to FAST is also an added dimension of competition. It's not very comfortable for the banks, but they have come to realise that you can't hold non-banks out," said Mr Menon.

He also said that NFIs' direct access to FAST and PayNow "closes the last-mile gap" in Singapore's e-payments journey.

"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. Adoption of e-payments will become even more simple for individuals and businesses," said Mr Menon.

Direct connection to FAST and PayNow will enable users of NFI e-wallets to make real-time fund transfers between bank accounts and e-wallets, as well as across different e-wallets.

Currently, most e-wallets require the use of debit or credit cards to top up funds, and fund transfers between e-wallets are not possible.

But soon, businesses that partner any of the 23 FAST or nine PayNow banks or e-wallets - traditionally closed-loop ecosystems - will be able to receive real-time payments from other users of e-wallets or mobile banking applications that will be joining FAST or PayNow.

This will enable businesses to access a larger market of consumers than before for receiving e-payments instantly and seamlessly, said MAS.

FAST and PayNow have served the needs of most consumer and business users in Singapore: FAST transaction volumes averaged more than 12.5 million a month in the third quarter this year; monthly transaction volumes for PayNow account for almost half of all FAST transactions.

NFIs will be able to connect directly through a new application programming interface (API) payment gateway developed by the Direct FAST Working Group, with guidance from the Singapore Clearing House Association and the Association of Banks in Singapore, which govern FAST and PayNow respectively.

MAS said this API is "better geared" to the technology architecture of banks and NFIs, and can also be used by other banks and NFIs in future.

Lim Kell Jay, head of Grab Financial Group in Singapore, noted that the integration of FAST and PayNow with GrabPay will "greatly enhance" the payments experience by giving consumers new ways to seamlessly and securely top-up and transact via GrabPay.

Arthur Lang, chief executive of Singtel International Group, said this industry milestone will enable customers to perform instant top-ups from their bank accounts to their Singtel Dash wallets and make payments at over 200,000 PayNow businesses with Dash.

TransferWise chief and co-founder Kristo Kaarmann said the fintech's integration into Singapore's Direct FAST network follows from similar integrations in Europe.

"This, from our experience, will encourage more constructive competition and innovation in payments to the ultimate benefit of the people of Singapore," he said.

READ MORE: Secure ecosystem is key in fast payment access for non-bank e-wallet players