The Monetary Authority of Singapore (MAS) opened a consultation on 25 August 2016, proposing changes to the payments regulatory framework and also the setting up of a National Payments Council.
With developments in technology and the creation of FinTech, the distinction between remittance and payments is becoming less clear with emerging providers not fitting categorically into the two classes.
This consultation, the first in a series of planned consultations, focuses on plans to combine the Payment Systems (Oversight) Act and the Money-changing and Remittance Businesses Act under one framework.
The consultation will look to create a single framework that will license, regulate and supervise all payment services. The framework will include store value facility holders, remittance companies and virtual currency intermediaries.
MAS also are looking to establish a National Payments Council (NPC). The NPC’s role would be to coordinate key developments within Singapore’s payments services market. In particular it will have a focus on promoting interoperability and adopting common standards throughout the various platforms. It is anticipated that the NPC will be made up of members from payment solutions users and providers and stakeholders to assist the drive in the payment solutions industry.
What this means for you
The anticipated regulation will be applied on an activity basis and entities transacting in Singapore will be required to apply for a single license to undertake multiple payment activities. It is hoped that a new framework will strengthen consumer protection, anti-money laundering and cyber security related payment activities whilst at the same time increasing the prospects of innovation and system interoperability.
The NPC should see the Singapore payment services market streamlined to provide clarity for entities transacting in it. This is opposed to the current market which, whilst providing a variety of payment solutions for consumers, can be perceived as fragmented.
MAS Deputy Managing Director, Ms Jacqueline Loh said that the consultation is “an important step for MAS and the payments industry to co-create the future of Singapore’s payments landscape; one where payments are swift, simple, and secure, supported by streamlined regulation and inclusive governance”. The conclusion should hopefully boost confidence in the Singapore payment services market.
The consultation closes on 31 October 2016.
PSD: New ECJ Case on Durable Medium, Provide or Make Available
Austrian Bank, BAWAG, have been challenged on the format of their communication with customers through their e-banking mailbox by consumer association, Verein fur Konsumenteninformation.
Two questions were posed, firstly, whether an e-banking mailbox constitutes the criteria of a‘durable medium’ and if notices of variation were either provided or made available to customers if given via an e-banking mailbox.
There are four elements of the definition under Article 4(25) of the Payments Services Directive (PSD), which form the criteria of a durable medium, as follows:
- Must enable the storage of information personally addressed to the customer;
- That is accessible for future reference;
- For an adequate period of time; and
- Guarantees the unchanged reproduction of the information.
The Advocate General (AG) stated that the durable medium is independent from physical structure. Instead the focus is on its functionality and features; thus developing the concept of durable medium which would vary according to technological evolvement.
The AG’s conclusions were:
Information transmitted by a provider to an e-banking mailbox of a customer constitutes information in a durable medium. The key reasoning is below:
- In order to be a durable medium, it must satisfy the criteria above. However, AG stated there were two elements of concern, whether the information can be stored for an adequate period, and whether unchanged reproduction is guaranteed. It is fundamental that the customer must be able to retain the information received, in a safe format which could be viewed at a later point.
- On the first element, the AG found the existence of the e-banking mailbox enables a format for a secured independent storage space that a customer can access with a username and password.
- On the second element, in order to guarantee unchanged reproduction, it ought to be impossible for the bank to change or delete the information. It will not be certain that a bank will meet this criteria as it will be under their control as administrators of the e-banking mailbox.
- With this in mind, the AG went on to say that payment service providers should be able to deal with this issue because the electronic documents should be capable of being stored separately, and allow the customer to download or print the document. Once in the customer’s possession on their hard drive, or on a printed version, this would then satisfy the element of unchanged reproduction.
Provided or made available
The difference between the two concepts is that information being provided, places the onus on the bank to actively communicate the information to the customer; whereas when the information is made available, the customer has taken a more active role in seeking this information from the bank, which, according to Recital 27 of the PSD, includes logging into a e-banking mailbox.
The AG emphasises the importance of effective transmission of the information – stating that it must go outside of the bank’s control and enter the sphere of the customer’s awareness. For BAWAG, emails were sent directly to the e-banking mailbox, but there was no outside communication to the customer’s personal email address. As the e-banking mailbox may not be regularly checked, it is questionable as to whether this goes far enough to make the customeraware of any unread messages in their e-banking mailbox.
BAWAG’s process was deemed to be sufficient to make available the information to the customer, but not sufficient to meet the more stringent requirement to be classified as providing the information. The AG stated the establishment of an alert to a private email address to advise that the message had been sent to the mailbox may enable it to be deemed to be provided as well.
What this means for you
Payment service providers may need to revisit their digital communication strategies in terms of how they send required information to their customers on the back of this opinion. However, the opinion is not binding and will be referred to a chamber within the Court of Justice of the European Union for consideration.