Collecting Payments for Other Sellers? When the PSA Applies

Who this applies to

This question comes up for any business that sits between a buyer and someone else who delivers the goods or service. Common examples are a marketplace for home-based sellers, a tutor or cleaner booking site, an events platform selling tickets for organisers, or a group-buy page that collects and then pays a supplier.

The risk is the same in each case: the customer pays you, the money sits in your bank account, and you pay it out to someone else later, less your fee. That flow looks like a payment service. If you only sell your own goods or services, this guide does not apply to you.

What the Payment Services Act regulates

The Payment Services Act 2019 took effect on 28 January 2020. MAS's FAQ on the Act (last revised 19 April 2024) says it regulates seven payment services. These are the ones a platform is most likely to touch, with MAS's own descriptions from its types of payment services page:

MAS's FAQ (question 14) says an entity provides merchant acquisition where it "enters into a contract with a merchant to accept and process payment transactions, which results in a transfer of money to the merchant". The FAQ also says services that process only data, not money, are treated as outsourcing and do not need a licence.

"It is only a small part of my business" does not help

A common assumption is that payment handling is fine because it is incidental to the real business. Section 5 of the Act says otherwise. It presumes that a person who provides a payment service while carrying on a primary business is also carrying on a business of providing that payment service, and that presumption "is not rebutted" by showing the payment service is related or incidental to the main business.

The penalties are set out in the same section. A company that provides a payment service without a licence or exemption can be fined up to S$250,000, plus up to S$25,000 a day for a continuing offence. For an individual, it is up to S$125,000, up to three years' jail, or both.

Licence classes, briefly

If you do need a licence, MAS's Act infographic shows two main classes. A Standard Payment Institution stays at or under S$3 million of monthly transactions for any one activity (S$6 million for two or more) and S$5 million of daily outstanding e-money. Above those, it is a Major Payment Institution. Either way, it is a regulated business with compliance, anti-money laundering and safeguarding duties, which is rarely realistic for a small platform.

The commercial agent exclusion, and why it is narrow

Part 2 of the First Schedule lists services that are not payment services. The one platforms ask about is paragraph 2(a): executing a payment transaction on behalf of the payer or payee by a commercial agent authorised to negotiate or conclude the sale or purchase of goods or services on behalf of the payer or the payee.

MAS's FAQ (question 8) defines a commercial agent as someone acting as an authorised agent for another person to negotiate or conclude sales, and gives the example of a motor vehicle dealer who accepts payments for the vehicle company whose cars it sells.

Note the wording: on behalf of the payer or the payee. A platform that acts for both sides, or that only lists sellers without being their agent, may not fit. Whether your contracts make you a commercial agent is a legal question. Do not rely on this exclusion without written advice.

How platforms usually avoid holding the money

The common design is to never let customer money pass through your own bank account. A licensed payment provider collects from the buyer and pays each seller directly, and your platform only takes its fee. Both large providers in Singapore offer this.

Stripe's Connect charges documentation explains that the charge type decides whose name appears on the buyer's statement and which account Stripe debits for refunds and chargebacks. With direct charges, refunds and chargebacks reduce the seller's balance. With destination charges, they reduce the platform's balance. Stripe's merchant of record guide adds that the merchant of record should be decided by your business model, not by the charge type.

Using a platform product does not answer every legal question by itself, but it changes the facts a lawyer looks at: who contracts with the buyer, who holds the funds and who is paid by whom.

Questions to settle before you launch

Take these to your lawyer and your payment provider together. They map to how MAS describes the regulated services.

MAS notes on its payments regulation page that since 26 August 2024 certain new licence applications must include a legal opinion mapping the proposed business model to the regulated payment services. That shows how much MAS weighs the exact model, and it is a good reason to get advice early rather than after launch.

For the fee side, our guides to Stripe fees in Singapore and comparing payment gateways set out the per-transaction costs.

Do it yourself or get help?

If you are building on Shopify, a booking tool or a no-code marketplace, check whether its built-in payments already pay sellers through a licensed provider. Many do. Where you are building your own platform, the payment flow should be designed in from the start, not added later.

We can set up Stripe or HitPay accounts and payment links in your name with Online Payment Setup (S$290). For a platform that needs connected seller accounts, platform fees and payout reporting, a Custom Tool or Dashboard (from S$1,990, fixed quote) covers the build. We implement the model your lawyer signs off; we do not give the legal opinion. If you also need a business account for platform fees, see our Airwallex vs Aspire vs Wise comparison.