If a central bank wants to play a leadership role in the local development of electronic money, it obviously has a range of options: it can issue e-money itself (Finland), it can participate in an operator (South Korea and perhaps Kyrgyzstan), it can impose standards for private initiatives (India), it can play a coordinative and supportive role in an industry-led standardization process (South Korea again), etc.
Electronic money more commonly known as "stored value cards/facility" (facility- indicates device neutrality-card, virtual card, mobile or other technology) in Singapore can be categorised into single purpose stored value (SPSVFs) and multipurpose stored value facilities (MPSVFs).
SPSVFs can only be used to pay for goods and services offered by the issuer (eg prepaid phone cards). In contrast, a MPSVF also allows cardholders to pay for goods and services offered by other merchants or organisations.
(a) a facility (other than cash), whether in physical or electronic form, which is purchased or otherwise acquired by a person (user) to be used as a means of making payment for goods or services up to the amount of the stored value that is available for use under the terms and conditions applying to the facility , and payment for the goods or services is made by the holder of the stored value in respect of the facility (rather than by the user); or
(b) all the facilities referred to in paragraph ( a ) provided under the same terms and conditions;
Section 77A of the Banking Act states that only banks authorised by MAS can issue stored value instruments that have multiple payment capabilities.
Under the new regime, - Payment Systems (Oversight) Act - which took effect on 23 June 2006, multi-purpose SVFs with stored values below S$30 million and single-purpose SVFs may be issued by any entity. Such SVFs do not require the approval of MAS.
As of June 2008, only two WA(widely accepted) SVFs have been approved by MAS. They are the "CashCard", introduced by Network for Electronic Transfers ( Singapore ) Pte Ltd (NETS) in November 1996, and the "ez-link Card" introduced by EZ-Link Pte Ltd in April 2002.
Consumers can choose to pay later (credit cards), pay now (debit cards), or pay before while/prior to making a purchase (SVF). Some banks issue multi-function cards with more than one function.
Multi-purpose SVF when operated on a small scale present low risk in terms of potential loss of stored value to their users. The old regulatory regime was therefore considered unnecessarily restrictive. It was decided to give the market more flexibility to meet consumers' needs, and encourage competition and innovation among different providers.
The framework provides a consistent basis for MAS to oversee payment systems and SVF in Singapore. It also liberalises the SVF market to encourage competition and innovation, and to better meet consumers' needs. This risk-based regulatory framework addresses the need for safety and efficiency in payment systems, and provides some protection for consumers using large-scale SVF, while avoiding unnecessary or excessive regulation of market players.
In the consideration of the application for the registration in this Royal Decree, the service provider shall be required to submit the application in accordance with the rules, conditions and procedures as prescribed by the Bank of Thailand in which at least consists of the following lists:
(1) a policy or plan for undertaking payment service business;
(2) an operation plan for undertaking payment service business;
(3) an administration and risk management system;
(4) an internal control system;
(5) a policy and security standard of information technology system;
(6) the possibility study and the risk assessment for providing service including an contingency plan.
[Richard Allen] Why would anyone use a prepaid card? I've been doing a survey of some U.K. products in that space. Typically, it costs £10 to get a card, a pound or so just to load some value, 50p minimum to buy something with it, a couple of quid to draw money out of an ATM, 3% currency charges for overseas use, and so on. Many of them charge a monthly fee of around £5 in return for lower charges, but they’re still expensive one way or another. Yet the market is still growing. Some of that growth is explained by the growth in online gaming, but I wonder if remittances might also be a strong growth driver.
In June 2006, the new Singapore Standard for Contactless ePurse Application, SS 518 CEPAS, was launched. Available for industry use, the SS CEPAS is a world's first nationwide interoperable micro-payment platform that bridges multiple sectors - in particular the transit and retail e-payment space.
The aim is to reduce the number of paper-based transactions and double the transaction value of card-based payments, e-money schemes and mobile payments from S$25 billion to S$50 billion by 2010.
Authorise private e-money dealers EMD's to purchase and sell e-money. Telco, Payment processors, Real/virtual card service providers amongst others can become EMD's apart from banks/Post Office & Microfinance etc.
Set up e-money switch to connect hosts of of EMD's. This will be owned and managed by a new Section 25 company (EMC), which manages the float accrued by issue of e-money. It will also act as e-Money Authority overseeing e-money operations & granting approval for EMD’s & monitoring their operations.
EMC will regulate fee for issue & redemption of e-money like TRAI.
Similar to having a demat account with DP – e-money account will be held by EMD who maintains and supports e-money transactions – receipts, payments. Handles transfers to linked bank account through the designated bank using NEFT or other means.
Temporary account – only permits payments, not reloadable. Max. Rs 10000
Regular account. Linked to a bank account & optionally to mobile number for mobile payments. Can receive e-money credit.
Once a day balance > Rs 10000 automatically transferred to bank account. Similarly inoperative balance > 1 year transferred to bank account.
Can be used in any e-money merchant location.
Balance can be redeemed by transfer to bank account.
No controversy of bank deposit nature of e-money. (Unlike US FDIC GC 8 interpretations)
Enables Public, private and non-financial institutions participation. (Most countries have high entry barriers that have prevented meaningful participation thus limiting growth)
Minimum regulatory burden but without risking public money – no prudential norms. (see European E-money directive) Here survival depends on efficiency of operation and reach to service a large customer & merchant base.
Not required to be regulated like banks. Banking functions are best left to the banks; but areas where banks have no incentive to compete – handling the very small value transaction which does not fit into their cost structure routed to e-money channel with better efficiencies.
EMD can earn in e-money distribution & redemption. No interchange (Most debated controversy around the world with VISA & Master Card Fees)
No worry of unclaimed money not being restored to State (US escheat laws)