Sensible M-Banking Regulation For The Poor Discussed By Policymakers

To promote effective regulation of mobile banking, CGAP, DFID, and the Alliance for Financial Inclusion (AFI) have organized the second Global Leadership Seminar for high level policymakers and regulators who set policy for branchless banking, including mobile banking. Despite regulatory

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To promote effective regulation of mobile banking, CGAP, DFID, and the Alliance for Financial Inclusion (AFI) have organized the second Global Leadership Seminar for high-level policymakers and regulators who set policy for branchless banking, including mobile banking.

Despite regulatory challenges and the financial crisis, policymakers are embracing mobile banking as a means of providing financial access to the unbanked poor.

Core issues around regulating mobile banking:

-Allowing nonbank third parties, such as local merchants, to conduct “cash-in/cash-out” transactions and interact directly with customers.

-Adapting the anti-money laundering and combating the financing of terrorism rules (AML-CFT) so they are based on real risks and are adapted to the realities of transactions conducted through remote agents.

-Figuring out the right regulatory space for the issuance of e-money and other stored-value instruments (particularly when issued by parties other than fully licensed and supervised banks).

-Determining how to ensure effective consumer protection (on a variety of fronts).

-Making sure payment systems are open to all players and adequately supervised.

-Getting the balance right in competition policies — the right incentives for pioneers to get into the branchless banking business without allowing customer-unfriendly monopolies.

“Mobile banking services offer millions of poor people a route out of poverty by helping them to improve their incomes and pay for healthcare and education,” says Mike Foster, UK minister for International Development.

“It is vital that policymakers ensure that the needs of the poor are central as they develop regulation for this innovative and emerging sector,”

“Mobile banking holds great potential, and CGAP is encouraged to see that governments everywhere are being deliberate and thoughtful as they merge the domains of finance, payments, and telecom to create a framework that balances customer needs with concerns around security and prudential regulation,” says Elizabeth Littlefield, CEO of CGAP, a microfinance center based at the World Bank.

L.D.

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