MAS seeks power to make competing banks open e-payment rails

Singapore

THE Monetary Authority of Singapore (MAS) proposed on Tuesday that the central bank be given powers to ensure interoperability for payment systems.

This would mean that MAS can force big banks here to open up their payment rails to competitors and third-party players to ensure that large payment systems are compatible with other payment systems.

The latest proposal was found in a new Payment Services Bill which was released on Tuesday for public consultation. The bill suggests the MAS would like to see a new payments regime replacing the existing one - and the new regime will regulate payment entities according to their activities and the ensuing risks.

The existing regulatory framework already provides MAS the power to mandate that a payment system operator gives third parties access to its system to offer services on "fair and reasonable commercial terms". MAS is now looking to import these powers into the new bill.

The central bank also wants the power to mandate any major payment institution to participate in a common platform for interoperability of major e-wallets. MAS further wants the power to mandate big payment players to adopt a common standard to make widely used payment acceptance methods interoperable. One such common standard is the upcoming standardised QR - or Quick Response - code.

Defining the lack of interoperability as a risk in the area of payments, MAS said in the consultation paper that the regulator needs to reduce fragmentation and enhance confidence in acceptance of e-payments.

"If key customer facing payment services do not interoperate, consumers will not have a simple and standardised experience, which is important to promote growth and development of the e-payments ecosystem." MAS said such powers will be imposed "only when the circumstances call" for it.

The central bank has proposed as well that companies offering virtual currency services should hold a payment licence, noting that virtual currencies pose anti-money laundering and terrorism financing risks.

The public consultation will run from Nov 21, 2017, to Jan 8, 2018.