Singapore to open payment rails to major non-bank financial firms from Feb 2021

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

The move 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, the MAS on Monday said.

This will give non-bank players that are 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 that allows participating entities to facilitate instant transfers of Singapore dollar funds between customers. There are currently 23 entities offering services via FAST, and nine banks specifically offering PayNow. FAST is short for Fast And Secure Transfers. 

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 The Business Times, Mr Menon said MAS’s view is that the payments network is a utility that exists to serve customers. With that, whether a consumer chooses a bank app, or a non-bank wallet, he or she should be equally served.

Mr Menon 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 in meeting anti-money laundering standards.

Mr Menon 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,” he said.

“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.”

In its statement, MAS said 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 that have traditionally been 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.

In a media statement, Kristo Käärmann, CEO and co-founder of TransferWise, said the move will “encourage more constructive competition and innovation in payments to the ultimate benefit of the people of Singapore”.

“Four years on from our launch here, we’re thrilled to be included in the Direct FAST scheme in the country, our first such integration in the region, and following on from similar integrations in the UK, EU and Hungary. By joining Direct FAST, we’ll be able to build even more competitive services, and save our customers even more money and time.”

Lim Kell Jay, head of Grab Financial Group, Singapore, said 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.

Shee Tse Koon, Singapore country head, DBS, said: “We believe that anything that benefits Singapore and her people, benefits us…We applaud MAS for their forward-thinking and inclusiveness, in ensuring that everyday digital transactions are accessible to all.”

Wee Ee Cheong, deputy chairman and CEO of UOB, said the bank has “long championed” open and interoperable systems as part of the lender’s commitment to make digital payments “simpler, smarter and safer”.

Similarly, Desmond Tan, OCBC’s head of group lifestyle financing, said Singapore must avoid fragmentation by closed-loop app ecosystems to help business embrace going digital. 

FAST and PayNow have served the needs of most consumer and business users in Singapore, with FAST transaction volumes averaging more than 12.5 million per 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 (ABS), 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.

Ong Ai-Boon, ABS director, said: “This is the first time the industry has opened access to these two important e-payment platforms to non-banks. FAST and PayNow adoption rates have exceeded expectations and we are confident that the addition of new players will help accelerate the national path towards a less-cash economy.”

Lawrence Chan, chairman of Banking Computer Services, said: “As the operator of FAST and PayNow, we are proud to be part of this ongoing progress of Singapore’s real-time payments infrastructure that will serve as both a catalyst and an enabler for innovative e-payments.”

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