Singaporeans will no longer be able to use PayPal to donate to foreign-registered charities and non-profit organisations (NPOs) by the end of the month.

Online payment giant PayPal will stop providing this service because it lacks the required remittance licence.

It ended its personal payment service last month for the same reason.

However, users here can still make PayPal donations to charities and NPOs registered locally.

Local charities can also still receive payments from PayPal users with accounts registered outside Singapore.

Online shoppers are unaffected.

The Monetary Authority of Singapore (MAS) said in a response to The Straits Times that offering such a payment service without any underlying goods or services transacted requires a remittance licence, which PayPal does not have.

“We’re following a specific law that the local regulators have asked us to follow. We take compliance very seriously,” said Mr Lawrence Chan, PayPal’s Asia Pacific merchant services vice-president.

He added that the move came after recent discussions with the MAS.

PayPal has been incorporated and operating in Singapore since 2005.

Customers were informed of the change via e-mail on Wednesday.

The payments will be phased out starting Thursday – users being gradually unable to send donations to foreign charities – before being fully discontinued by March 31.

Mr Chan said the number of affected customers is “very small” as PayPal’s core business is payment for commercial transactions.

He declined to give details on how many PayPal users there are in Singapore.

Last month, PayPal stopped allowing users here to wire money to one another, or overseas, for personal transactions like cash gifts.

PayPal has no plans to roll back any other payment service, said Mr Chan.

He declined to comment on whether the company will be seeking a remittance licence.

“We’re still supporting charities. They can still use us, they just have to register locally,” he said.

But national director of Habitat for Humanity Singapore Yong Teck Meng said the move would make donations to foreign countries harder. “If you encourage Singaporeans to give overseas, you’re elevating the whole giving culture and you’ll benefit locally as well (by making Singapore a better, more giving society). If you stop folks from giving overseas, you encourage a selfish mindset in charity.”

Habitat for Humanity Singapore will not be too affected as it is registered here and less than 5 per cent of its donors use PayPal, added Mr Yong.

The Money-Changing and Remittance Businesses Act requires remittance businesses to be licensed, banking law academic Sandra Booysen told The Straits Times.

The Act reduces the risk of people losing their money by trying to ensure that entities receiving remittance money are of good character and financially sound, said the assistant professor at the National University of Singapore.

“It is not a case of the MAS trying to obstruct donations to charity; it sounds to me to be a case of applying the law and requiring remittance businesses to be licensed,” said Prof Booysen.

http://news.asiaone.com/print/News/Latest%2BNews/Science%2Band%2BTech/Story/A1Story20130321-410187.html

http://www.zdnet.com/sg/paypal-to-stop-singapore-fund-transfers-to-foreign-charities-7000012796/

http://techcrunch.com/2013/03/19/paypal-stops-charity-donations-from-singapore-accounts/