UK-Singapore FTA may loosen e-wallet rules for UK financial firms here

Singapore

SINGAPORE's latest trade deal with the UK may translate to more attractive terms of opening up for UK-based financial firms operating here.

For one thing, with the free trade agreement (FTA) signed on Thursday as the backdrop, Singapore has agreed to a review next year to consider raising the e-wallet payment limits under the Payments Services Act (PS Act), which impacts fintechs like TransferWise and Revolut. To be clear, the Monetary Authority of Singapore (MAS) said that this is a planned review, and would apply consistently to all e-wallets operated by major payment institutions.

The Republic will also discuss opportunities for UK firms to apply for digital wholesale bank (DWB) licences here.

In response to queries from The Business Times, an MAS spokesperson said the upcoming review of the payments limit in 2021 is a planned review. "As stated in the Second Reading of the Payment Services Bill, these e-wallet limits may be reviewed over time, as Singapore's financial system and payment landscape evolves," said the spokesperson.

"Any changes to these limits would apply consistently to all e-wallets operated by major payment institutions."

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Under the PS Act enforced in January this year, e-wallet users in Singapore can hold no more than S$5,000 in their accounts at any point in time. Users are also not allowed to transact more than S$30,000, or its equivalent in foreign currency, on their e-wallet each year.

In support of financial services and trade and investment of UK firms here, MAS said it will consider the industry's views, including those of UK firms, on the e-wallet limits.

"In undertaking this review, MAS's policy objectives of ensuring continued financial stability and consumer protection remain unchanged," said the spokesperson.

When asked about fresh DWB opportunities for UK firms, the regulator told BT it will review whether to grant more of such licences in future. Should MAS decide to open up more licences, it "welcomes all firms, including UK firms", to apply to be DWBs in Singapore.

But while the UK-Singapore FTA provides for Singapore and the UK to discuss UK firms' interest in becoming DWBs, it "does not oblige" MAS to award DWB licences to UK firms, said the spokesperson.

In the immediate term, MAS will take a "prudent approach" and will focus on ensuring that Singapore's four new digital banks are on track to commence operations within about a year of MAS's approval.

Venkatesh Saha, TransferWise head of expansion for Asia-Pacific and Middle East, told BT that the consideration being given to increase e-wallet payment limits is "particularly encouraging". This would allow the firm to offer its services to a broader spectrum of Singaporeans who need them, such as parents sending college tuition to their children overseas. "Since we first launched our Asia-Pacific hub here four years ago, Singapore has been moving rapidly to foster greater and speedier fintech innovation in the country," said Mr Saha, citing the recent liberalisation of the local payments infrastructure as an example.

TransferWise is one of six non-bank financial institutions that will have direct access to the banking system's real-time retail payment rails from February 2021. Currently, most e-wallets require the use of debit or credit cards to top up funds. Fund transfers between e-wallets are also not possible.

Revolut Singapore chief James Shanahan told BT that if and when e-wallet limits are increased, customers will be able to use their Revolut accounts to manage more of their money and in more areas of their financial lives. The move will also spur greater growth in the local fintech industry and consolidate Singapore's position as the leading fintech hub in Asia, he said.

Mr Shanahan further noted that Revolut remains "open-minded" about progress and developments in regulations, as it explores the "diverse" licensing opportunities available here.

The firm bowed out of Singapore's digital banking race last year due to high capital requirements, as reported by BT earlier. "When the right opportunities become available, we will move swiftly and decisively, in line with our ambition to remain amongst the world's fastest growing fintechs," said Mr Shanahan.

As part of the UK-Singapore FTA, Standard Chartered Singapore will also be entitled to additional places of business (POBs) on top of the 50 which it is entitled to as a "Significantly Rooted Foreign Bank" (SRFB). As at August, it had 18 POBs.

The bank was on Thursday granted enhanced SRFB privileges by MAS, paving the way for it to set up a digital-only bank. These privileges allow StanChart to secure an additional full bank licence to establish a subsidiary to operate new or alternative business models such as a digital-led bank with ecosystem partners. If this digital bank comes to pass, StanChart will join the four digital banks that were recently awarded licences by MAS.