Revolut, Transferwise, and the Singapore Payment Services Act

Written by || February 17 2020

The Monetary Authority of Singapore (MAS) announced on 28 January of the enforcement of a new Payment Services Act, the first comprehensive legislation of its kind that regulates distinct activities in payment services ranging from digital payments to the trading of cryptocurrency such as Bitcoin and Ether.

The Payment Services Act comes at a well-coordinated time before the MAS awards a total of five digital bank licenses to a select few of its 21 reported applicants. While that may be the case, some have begun to speculate on the effects and ramifications the Act will have on fintechs that are hoping to or have already begun operations in Singapore.

Revolut is a Singapore-incorporated fintech that offers fee-free currency exchange services and cross-border money transfer services in three subscription tiers. According to the General Terms listed on the British fintech’s official website, Revolut is regulated as a major payment institution by the MAS under the Payment Services Act. It is also eligible for a temporary exemption from holding a license with regards to other services pursuant to the Payment Services (Exemption for Specified Period) Regulations 2020.

Transferwise, a competitor of Revolut’s that offers similar cross-border transactions and currency exchange services, has a balance limit of S$5000 per retail account as mandated by the Payment Services Act. This means that entities such as small and medium enterprises (SMEs) in Singapore that use retail accounts on Transferwise may encounter difficulties in sending and accepting payments across international borders. Unlike Revolut, however, Transferwise offers an alternative solution to its customers, allowing them to transfer money to a connected external bank account when their Transferwise balance exceeds a value of S$5000.

While Revolut may be exempted from the Payment Services Act for now, that exemption is only temporary. It leads one to wonder what Revolut may have up its sleeves. A news report dating back to November 2019 indicated that Revolut had dropped out of the digibank race. While Revolut has begun adopting open banking practices in the UK that allows retail consumers to access transactions from multiple bank accounts on their central app, it may take a matter of years before Revolut can obtain a license to offer the same services to its Singapore consumers.

The Payment Services Act aims to strengthen consumer protection and promote confidence in the use of e-payments by providing regulatory clarity on new types of payment activities. It remains to be seen for digital banks such as Revolut to continue its growth and innovation by attracting and retaining Singapore customers.