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Legal Framework

Application for Approval to Operate a Payment System or Issue a Designated Payment Instrument or to be Registered to Provide Merchant Acquiring Services

Section 11 of the FSA and Section 11 of the IFSA requires an operator of a payment system to obtain approval from BNM before it may commence its operations. Approval is required for the operation of a payment system which (see Division 1 of Part 1 of Schedule 1 of the FSA and Part 1 of Schedule 1 of the IFSA):

(a) enables the transfer of funds from one banking account to another, which includes any debit transfer, credit transfer or standing instructions but does not include the operation of a remittance system approved under section 40 of the Money Service Business Act 2011 or;

Explanation

Examples of payment systems that fall within the scope of this provision are the Interbank GIRO (IBG), Shared ATM Network (SAN) and Financial Process Exchange (FPX).

(b) provides payment instrument network operation which enables payments to be made through the use of a payment instrument.

Explanation

The payment systems that fall within the scope of this provision have the following elements:

(i) The payment system provided by the operator is to enable payment to be made using a payment instrument under the operator’s acceptance mark or brand;
(ii) Participants of the payment systems are payment instrument issuers and merchant acquirers and for the avoidance of doubt, the operator of the payment system can be the issuer and/or the acquirer; and
(iii) Provides clearing and/or settlement services for such payment instrument issuers and merchant acquirers.

Examples of such systems are payment systems provided by Visa, MasterCard, American Express, UnionPay or Diners.

Section 17 of the FSA requires a person who intends to provide merchant acquiring services to be registered with BNM.

See also: Submission Requirements for Application for Approval to Operate a Payment System or to Issue a Designated Payment Instrument or to be Registered to Provide Merchant Acquiring Services