Do you use e-wallets like PayLah! & GrabPay? You need to read this
Your e-wallet just got a little more secure.
E-wallets like Alipay and WeChat Pay are big in China. Just these two payment services alone processed almost S$3.9 trillion in payment transactions in 2016.
Closer to home, more than 1 billion transactions are made on the GrabPay platform yearly in the region. Grab does not provide the value of GrabPay transactions on the app but according to its Head of GrabPay, more than three quarters of users used the e-wallet to pay for their rides in 2017.
The increasing prevalence of e-wallets begs the question: Is it safe and what is being done to keep consumers’ money from being swallowed?
If there’s anything oBike taught us, it is that money deposited with a company is not easily recovered, especially when said company collapses.
This is why the new Payment Services Bill which was passed in Parliament on January 14 is important to consumers.
The Payment Services Bill was designed to protect consumers through regulation of payment services, while simultaneously encouraging the growth of such services.
“So what does this mean for me then?”, you may be wondering.
Bear with us a bit as we take you through three benefits of the Payment Services Bill to take note of as a consumer, especially if you’re a heavy user of e-wallets.
1. Keep your money when companies go bankrupt
One area that the bill aims to address is the risk of customer monies entrusted to payment service providers being lost, such as when a service provider enters a state of insolvency.
As such, the Bill now requires service providers to safeguard against such events by having the following measures in place:
- An undertaking or guarantee by any bank in Singapore or approved financial institution to be fully liable to the customer for such monies,
- A deposit in a trust account,
- Safeguarding in any other manner as may be prescribed by MAS.
More importantly, personal payment accounts, such as an e-wallet, will be subjected to both a stock cap and an annual flow cap, at S$5,000 and S$30,000 respectively.
For those not in the know, a stock cap is the maximum amount of funds that can be held in a personal payment account at any time.
An annual flow cap is the maximum cumulative amount of yearly outflows from the personal payment account. In this case, the cap of S$30,000 will not apply to transfers made to the consumer’s designated bank accounts.
These caps are aimed at helping consumers by limiting the potential loss from a personal payment account.
2. Keep your money safe from hackers
The Bill is also aimed at providing better cyber protection for consumers, by way of giving the Monetary Authority of Singapore (MAS) the authority to impose requirements for technology risk management and cyber security risk management on payment service providers.
Payment services providers are also required to ensure that they have sufficient measures against hacking, in areas where user authentication, data loss protection and cyber-attack prevention and detection are concerned.
3. Make transferring money between e-wallets easy
People in Singapore use a variety of e-wallets. This leads to fragmentation of payment solutions because the e-wallets cannot “talk” to each other.
For example, if you use Grabpay, you cannot use it to pay someone who uses PayLah!.
With the new Payment Services Bill, MAS will have the power to mandate that a major payment system operator allows third parties to access its system so that different platforms can exchange information.
This is called interoperability. To do this, MAS can also get major payment institutions to participate in a common platform like an e-wallet which is used widely.
Lastly, MAS can mandate that major payment institutions adopt a common standard or payment acceptance method.
The benefit to this is that e-wallet users can still use a variety of e-wallets but be able to transfer money between them, making it more convenient to use e-payments.
To find out more about the Payment Services Bill, you can read it here.
Top photo by Joshua Lee.