MAS launches public consultation on proposed guidelines to protect users of e-payments

The Monetary Authority of Singapore (MAS) has launched a public consultation on proposed guidelines to protect users of electronic payments or e-payments.

The promotion of e-payments and the drive towards a cashless society is one of the national strategic projects under Singapore’s Smart Nation plans. The proposed E-payments User Protection Guidelines aim to encourage wider adoption of e-payments by setting standards on the responsibilities of financial institutions and e-payment users.

In 2016, MAS embarked on a review of the regulatory framework governing payment services in Singapore with a view to modernising and streamlining the existing frameworks to encourage the wider adoption of e-payments in Singapore. MAS consulted twice on the proposed activity-based Payment Services Bill in August 2016 and November 2017.

A key recommendation from the payment services regulatory review was to enhance consumer or account user protection. MAS has proposed measures to protect funds belonging to account users and merchants in the Bill. However, a comprehensive framework will also need to provide protection for account users from losses arising from unauthorised or mistaken payment transactions.

To reduce these risks of unauthorised or mistaken payment transactions to users, MAS proposes to issue a set of guidelines to standardise the protection given to users arising from these two risks. MAS plans to develop and publish the Guidelines in the first half of 2018.

The guidelines are for individuals and micro-enterprises, employing fewer than 10 persons or with an annual turnover of no more than S$1 million. They are intended to protect e-payment users from higher value losses. Accounts which can hold a limited amount of less than S$500 such as transport stored value cards are not covered in these guidelines.

The proposed guidelines will cover: 1) Liability caps to clarify the amounts that the account user and the financial institution is liable for in any unauthorised payment transaction; 2) Notification duties of account users and financial institutions for all payment transactions; and 3) Resolution processes for both unauthorised payment transactions and mistaken payment transactions.

The Guidelines clarify when, and if so how much, an account holder should pay for losses arising from unauthorised transactions. Where the account holder did not contribute to the loss, and where he took full care of his protected account, he is not liable for such loss. The account holder is liable for a loss of not more than S$100 when the account user was not reckless but nevertheless contributed to the loss. If the loss was primarily due to recklessness of the account user, then the account holder is liable. But the actual loss will be capped at any applicable transaction limit or daily payment limit that the account holder and FI have agreed to.

Under the Guidelines, FIs should provide sufficient transaction notifications to allow the account holder to properly monitor his protected account. The FI should send the account holder a consolidated list of all the transactions made to or from the protected account, at least once a day. The notifications, containing detailed information of the transaction including, recipient credentials, transaction amount, time and date, and the merchant’s trading name, should be sent to the account holder’s phone number by SMS or email address.

At the same time, account holders should provide their updated contact information to the FI and monitor notifications from the FI. They should report unauthorised transactions to the FI by the next business day and give the FI full information. They should also make a police report if requested to by the FI.

Account users are encouraged to check the recipient’s details carefully before executing payment transactions. In the event of a payment made accidentally to the wrong person, both the payer’s FI and the recipient’s FI should make reasonable efforts to recover the money paid to the wrong person within the proposed timeline. This includes informing the recipient of the transaction and that wrongful retention of money that does not belong to him or her, is a criminal offence.

MAS is seeking feedback from financial institutions, businesses, and other interested parties, including members of the public, consumer associations, government agencies, law firms, trade associations, non-profit organisations, charities etc. who may be impacted by or interested in the proposed review.

The public consultation will run from 13 February to 16 March 2018. Copies of the public consultation paper and policy highlights document are available on the MAS website. MAS invites e-payment users, financial institutions, and businesses to give feedback on the proposed guidelines.

MAS Deputy Managing Director, Ms Jacqueline Loh said, “MAS hopes that these guidelines will help to make e-payments simpler and more secure, and give individuals and micro-enterprises more confidence to adopt and integrate e-payments into their daily activities.”

The Consultation Paper can be accessed here.

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