How the Payment Services Act Impacts Money Changer Businesses in Singapore

If you’re looking to start or already operate a money changer business in Singapore, understanding the regulatory environment is essential. One of the most significant developments in recent years is the introduction of the Payment Services Act (PSA), which came into effect on 28 January 2020. This comprehensive piece of legislation reshaped how financial services, including money-changing, are governed in Singapore.

Whether you’re a seasoned entrepreneur or considering entering the industry, knowing how the PSA impacts your operations is vital. In this blog, we break down what the PSA is, how it applies specifically to money changer businesses, and what you need to know to remain compliant and competitive in Singapore’s tightly regulated financial ecosystem.

Understanding the Payment Services Act

The Payment Services Act consolidates and modernizes Singapore’s regulations on payment-related activities. Before the PSA, money changers were primarily governed by the Money-Changing and Remittance Businesses Act. With digital innovation transforming the way we handle money, the Monetary Authority of Singapore (MAS) introduced the PSA to address emerging risks and create a more robust regulatory framework.

The PSA covers seven key types of payment services, including:

• Account issuance services

• Domestic and cross-border money transfer services

• Merchant acquisition services

• Electronic money issuance

• Digital payment token services

• Money-changing services

For those involved in a singapore money changer business, the PSA is especially relevant because it brings money-changing services under one unified licensing regime.

What the PSA Means for Money Changer Businesses

So, how exactly does this new law affect you if you operate or plan to operate a money changer business in Singapore?

Let’s break it down:

1. A Unified Licensing Framework

Under the PSA, anyone engaging in money-changing services must now apply for a Money Changer License in Singapore. Unlike before, where licensing was governed under separate regulations, the PSA has streamlined the process into a single, tiered framework consisting of:

• Money-Changing License

• Standard Payment Institution License

• Major Payment Institution License

For traditional singapore money changer businesses that focus solely on currency exchange and not remittance or payment processing, the Money-Changing License is the relevant category.

This shift to a more unified and clearly defined licensing structure helps ensure consistency in supervision and makes it easier for entrepreneurs to understand their compliance obligations.

2. Fit and Proper Criteria

MAS has raised the bar on who can operate a money changer business in Singapore. To be granted a Money Changer License, applicants must meet “fit and proper” criteria, which include:

• A clean legal and financial track record

• Proper internal compliance mechanisms

• Transparent ownership structure

• Sound business plan

This ensures that only credible and financially sound individuals and entities can enter the market, increasing trust in the industry.

3. Ongoing Compliance and Reporting

Once licensed, the compliance work doesn’t stop. The PSA introduces strict ongoing obligations such as:

• Submission of periodic reports to MAS

• Maintaining adequate records for at least five years

• Implementing Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) policies

This means that as a money changer business in Singapore, you’ll need to dedicate resources to internal compliance or hire professionals to help you stay on top of regulatory requirements. The MAS takes compliance seriously, and violations can lead to heavy penalties or even license revocation.

4. Consumer Protection and Cybersecurity

The PSA isn’t just about compliance; it’s also about safeguarding consumers. Although traditional money changers may not deal with digital assets, the broader environment under the PSA enforces better data security and anti-fraud measures across all payment services.

This cultural shift toward greater responsibility means that even physical money changers are expected to operate transparently and professionally, ensuring a secure experience for consumers and tourists alike.

5. Opportunities for Business Expansion

While the PSA introduces more regulation, it also opens doors. If you’re already holding a Money Changer License in Singapore, and you’re considering expanding your services to include remittance or digital wallets, the licensing framework allows for growth under a scalable structure.

You can apply for a broader license category, such as the Standard or Major Payment Institution License, depending on your transaction volume and business model. This flexibility makes Singapore a future-proof location for your money-changing business.

Know more: Understanding the Structure of a Private Limited Company in Singapore

Setting Up a Money Changer Business in Singapore Today

If you’re just starting, here’s a quick overview of the typical process:

1. Incorporate your business – Register a private limited company in Singapore.

2. Apply for a Money Changer License – Submit your application to MAS, along with the required documentation and licensing fees.

3. Set up AML/CFT policies – Prepare internal policies and procedures to detect and prevent financial crime.

4. Comply with premises requirements – Your physical outlet must meet MAS’s criteria for customer security and privacy.

5. Ongoing supervision – After licensing, you’ll need to adhere to reporting requirements and renewals.

Given the complexity of the application and compliance process, many entrepreneurs choose to work with a local consulting firm or legal advisor to streamline their business registration and licensing.

Final Thoughts

The Payment Services Act has certainly raised the bar for money changer businesses in Singapore, but that’s not necessarily a bad thing. In fact, this tighter regulation is designed to create a safer, more stable financial ecosystem that benefits both business owners and consumers.

For entrepreneurs who are serious about launching or sustaining a money changer business in Singapore, understanding and complying with the PSA isn’t just a regulatory requirement—it’s a competitive advantage. The businesses that adapt and professionalize will be the ones that thrive in this new landscape.

If you’re planning to apply for a Money Changer License in Singapore, now is the time to ensure that your operations, staff, and systems meet the new standards. It’s an investment not just in compliance, but in your long-term success.

FAQs

1. How long does it take to obtain a Money Changer License in Singapore?
The process typically takes around 3 to 6 months, depending on how quickly you can compile the necessary documents and respond to MAS inquiries.

2. Can a foreigner start a Singapore money changer business?
Yes, foreigners can own and operate a money changer business in Singapore, provided they meet MAS’s fit and proper criteria and establish a registered Singapore entity.

3. What’s the difference between a Money Changer License and a Major Payment Institution License?
A Money Changer License is specifically for currency exchange services. A Major Payment Institution License allows for broader financial services, including high-volume remittance, e-wallets, and more.