A payment facilitates a transfer of funds, thereby discharging a payer’s obligation to a payee. Numerous transactions take place in a market economy every day. With a payment system, these transactions are carried out freely and efficiently. The modern payment systems in Singapore evolved out of changing consumer needs, advancements in technology, and developing and using new financial activities.
Singapore’s payment systems have gradually changed from cash and paper transactions and cashless payment instruments to reliable, fast, and efficient clearing and settlement systems like MEPS. Other than cash, the common retail payments in Singapore include cheques, debit and credit cards, interbank GIRO transfers, mobile wallets, direct debit, and Internet banking.
A payment system comprises a set of financial instruments, rules and banking procedures to ensure easy circulation of money.
A modern payment system consists of three prime elements such as:
- payment instruments through which the payment is authorised and submitted. For instance, the payer uses them as a means to authorise the bank to transfer funds, while the payee uses them as a means to authorise the bank to collect funds from the payer.
- the clearing process, which includes the payment instruction exchanged between the banks
- the settlement process, wherein the two banks settle the payment transaction bilaterally.
What is MEPS?
MEPS, which is an acronym for the MAS Electronic Payment System, is an interbank funds transfer and payment system developed for large-value Singapore dollar online transfers. Being a real-time gross settlement (RTGS) system, MEPS came into effect in July 1998. One of the prime features of MEPS is the real-time transfer of funds and its irrevocable nature.
Owned and managed by the Monetary Authority of Singapore (MAS), businesses can use MEPS for the settlement of scripless Singapore Government bonds and other debt instruments, both government and corporate.
Get to know the benefits of using MEPS
SMEs can use MEPS to:
- Make instant payments – MEPS helps the convenient and urgent transfer of high-value SGD-only payments
- Save time and extra cost incurred on cheques, postage, and stationery
- Ensure a continuous supply of goods and services by making quick and timely settlement of critical payments
- Maintain long-term relationships with suppliers – by setting up payment schedules, you can avoid delays in payments
- Have better cash-flow management due to payment certainty
- Online funds transfers or payments enable easy reconciliation of accounts by generating and categorizing payment transactions via MEPS
Singapore has numerous MEPS clearing banks to help small and mid-sized enterprises receive or pay money quickly in Singapore dollars. DBS is one of them with the largest network. It helps you do real-time interbank transfers to make time-critical payments through various platforms like DBS IDEAL, DBS IDEAL Connect, and SWIFT.
Once the payment is processed, the payer and payee will receive email notifications through eReports. All you have to do is to register with the IDEAL application.
How does MEPS function?
The participating banks’ current accounts with the Monetary Authority of Singapore are designed to promote RTGS payments. Each of these current accounts has a Reserve Account and an RTGS Account. The Reserve Account holds a bank’s Minimum Cash Balances (MCB) within the day. According to the Banking Act, the MCB requirement for banks with MAS in Singapore is 3 percent of the total liabilities.
Any amount exceeding the MCB requirement is transferred to the RTGS Account to use for clearance and settlement of MEPS payments.
MEPS payments or receipts are structured to help businesses with better cash-flow management. They help SMEs have better relationships with their suppliers or vendors and grow their business in the future.