MOBILE PAYMENT REGULATION IN THE 'STATES MEMBERS OF THE WEST AFRICAN ECONOMIC AND MONETARY UNION (WAEMU) (UEMOA) WORKSHOP ON CROSS-BORDER MOBILE PAYMENTS REGULATION AND REGIONAL INTEGRATION (Mumbai, March 29-30, 2012) Presented by : Mrs Jocelyne Akuwa DOGBE AZOMA Deputy Director - Payment Systems Directorate Banque Centrale des Etats de l'Afrique de l'Ouest

2 OUTLINE INTRODUCTION FINANCIAL INTEGRATION AND CROSS-BORDER PAYMENTS IN THE WAEMU MOBILE PAYMENTS IN THE WAEMU AND CROSS-BORDER PAYMENTS ISSUES CURRENT SITUATION AND PROSPECTS FOR REGULATING CROSS- BORDER MOBILE PAYMENTS IN THE WAEMU CONCLUSION

3 INTRODUCTION  Eight (8) countries : Bénin, Burkina Faso, Côte d'Ivoire, Guinée-Bissau, Mali, Niger, Sénégal et Togo ;  A single currency ;  A common central bank (Banque Centrale des Etats de l'Afrique de l'Ouest) ;  Centralization of foreign currencies reserves ;  Uniform banking, payment systems, and external financial relations regulation ;  A supranational banking supervision : Banking Commission of the West African Monetary Union.

4 xx WAEMU socio-economic environment favourable to the development of mobile payment  Weak banking rate (lower than 15%)  Development of new technologies of information and telecommunication in recent decades (Rate of mobile phone usage estimated at à 38%) - vary between 9 % in Niger and 70% in Senegal  Modern payment systems  Important mobility of the population within and outside the WAEMU (large flow of funds within as well as in and out the WAEMU)  Development of the microfinance sector INTRODUCTION

5 xx  In the financially integrated environment of the WAEMU, BCEAO has set a regulatory framework to promote the emergence of banking and non banking actors offering e-money services, such as mobile payment  Given the potential of mobile payment for the monetary Union population's financial inclusion : BCEAO is challenged to update its current regulation and is implied along with all stakeholders in the development of mobile payments in and outside the WAEMU  Accordingly, the Governor of the BCEAO put the development of financial services based on mobile phone on the top of the institution 2012 agenda INTRODUCTION

Classification of cross-border payments in regards to regional regulations  Payments between WAEMU countries : totally free, not subjected to any restrictions under the Treaty of the Union  Cross-borders payments (between WAEMU countries and other countries) : - Funds reception : Free, no restrictions - Sending funds : regulated in function of the underlying transaction (whether it is for current transactions or investments) I- FINANCIAL INTEGRATION AND PAYMENTS BETWEEN WAEMU COUNTRIES

General rules on payments between WAEMU countries  Authorized institutions : Banks and authorized intermediaries ; Postal administrations ; Financial payment institutions. I- FINANCIAL INTEGRATION AND PAYMENTS BETWEEN WAEMU COUNTRIES

General rules on cross-border payments towards non WAEMU countries  Compliance with the external financial relations regulation and AML/FT standards, such as : No restrictions on reception of funds from other countries ; Ceilings of remittances to countries outside the WAEMU without proof : FCFA ($1 000) per transfer ; Freedom of issuing payments to other countries for common operations with a justification of the fund provenance (imports, remittances from migrants) ; Verification of the identity of the senders and recipients of transfers (KYC) ; Prior approval for investments transactions. I- FINANCIAL INTEGRATION AND PAYMENTS BETWEEN WAEMU COUNTRIES

Type of mobile payments in the WAEMU  Payment services by mobile phone with issuance of e- money (Prepaid / Electronic wallet)  Payment services by mobile phone without issuance of e- money and backed by a bank account (mobile banking) II- TYPES OF MOBILE PAYMENTS IN THE WAEMU AND CROSS- BORDER ISSUES

Types of mobile payments in the WAEMU  Payment services with mobile phone with the issuance of e- money : Two models of e-money issuance (9 authorized projects, only 4 are functioning)  Banking model (8/9) : a bank in partnership with a Mobile Network Operateur  Non banking model (1/9) : Electronic money issuer institutions with a specific license delivered by the Central bank II- TYPES OF MOBILE PAYMENTS IN THE WAEMU AND CROSS- BORDER ISSUES

Types of mobile payments in the WAEMU  Mobile phone payment services with domestic issuance of e-money (for the time being) : GIM-Mobile within WAEMU/ Orange Money : Côte d'Ivoire/Mali/Sénégal / Yoban'tel in Senegal only.  Reloading ;  Withdrawals ;  Money transfer within WAEMU ;  Airtime purchase.  Balance inquiry for prepaid account or electronic wallet. II- TYPES OF MOBILE PAYMENTS IN THE WAEMU AND CROSS- BORDER ISSUES

Types of payments services offered with mobile phones in the WAEMU  Mobile services attached to a bank account for WAEMU countries only (Mobile banking) : All WAEMU banks can offer these services through the GIM-UEMOA (common platform)  Withdrawals / Transfers / Airtime purchase ;  Bank accounts balance inquiry ;  Mini-statement : detail of last five transactions ;  Checks : checks order and status inquiry, check opposition ;  Cards : association du téléphone à une carte bancaire, statut, opposition ;  Exchange rates inquiry. II- TYPOLOGIE ET ENJEUX DES PAIEMENTS TRANSFRONTALIERS PAR TELEPHONE PORTABLE DANS L'UEMOA

What are the stakes ?  Between WAEMU countries  No specific regulatory constraints, under the free movement of funds within the monetary Union ;  Compliance with the regulation of the fight against money laundering and terrorist financing  Operational modalities to be implemented in connection with MNOs in order to reach interoperability between technical platforms II-TYPOLOGIE ET ENJEUX DES PAIEMENTS TRANSFRONTALIERS PAR TELEPHONE PORTABLE DANS L'UEMOA

What are the stakes ?  Between WAEMU countries and others  Ensure that transfers are performed by authorized institutions (banks, postal administration, financial payment institutions)  Compliance with the governing rules of external financial relations, on the grounds of transfers (preserving the common pool of foreign exchange) ;  Compliance with the anti-money laundering and terrorist financing (maintaining the integrity and stability of the financial system of the Union). II- TYPOLOGIE ET ENJEUX DES PAIEMENTS TRANSFRONTALIERS PAR TELEPHONE PORTABLE DANS L'UEMOA

Current regulation in WAEMU countries  Regulation on external financial relations  Regulation on payment systems  AML (Anti Money Laundering)Directive  Directive on measures to promote banking and the use of cashless payments  Banking Law  Circular on the issuance of electronic money and electronic money issuers III- CURRENT SITUATION AND PROSPECTS OF THE REGULATION OF CROSS-BORDER MOBILE PAYEMENTS

Current status of the implementation of regulation in the WAEMU  Since 2006, no MNO has requested a license to issue e-money in spite of the regulation allowing non bank institutions to issue electronic money and financial services using modern means of payments such as mobile phones;  No precise procedures for the reception and the safeguarding of funds received in exchange for the issuance of electronic money  Technical security and organizational requirements to issue e-money not specified in the current regulation III - CURRENT SITUATION AND PROSPECTS OF THE REGULATION OF CROSS-BORDER MOBILE PAYEMENTS

Outlook of the regulation  Clarification of the principle of allowing banking and non banking institutions to promote the use of electronic money and to issue modern means of payment  Strengthening of the licensing process and supervision of mobile money issuers, in particular through the involvement of telecommunications' regulators  Clarification of the categories of actors entitled to distribute payment services by mobile phone and of the process of risks management III- SITUATION AND PROSPECTS OF THE REGULATION OF CROSS- BORDER MOBILE PAYEMENTS

Outlook of the regulation  Consideration of the WAEMU current regulation on external financial relations when looking into the propositions of mobile payments  Cross-reading of the external financial relations and the electronic money regulations  Definition of a supervision process for MNO offering mobile payments in connection with the Telecom Regulatory Authorities III- SITUATION AND PROSPECTS OF THE REGULATION OF CROSS- BORDER MOBILE PAYEMENTS

19 CONCLUSION  Financial services offered through mobile phone increasing  Aspects to be considered in regulating cross-border mobile phone payments and balancing the search for financial stability and financial inclusion :  Balancing mobile phone payments' requirement and risks control ;  Procedures for reception of funds by non banks stakeholders ;  Terms of distribution of financial services through mobile phone ;  Interoperability of mobile payment regionally and internationally ;  Consideration of external financial relations regulation in the operational level : payments localization, implementation of ceilings in the e-money issuers information system

20 CONCLUSION  Development of a scheme to supervise issuers and distributors in all organizational, prudential, operational and technical aspects, along with the following stakeholders :  Mobile Network Operator and and issuers of means of payments : supervision of distributors ;  Regulatory Authority for Telecommunication : definition and verification of quality and safety compliance  Banking supervisor : verification of compliance with prudential standards ;  Payments overseer : efficiency, technical and organizational security of e-money ecosystem

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