This is the third in the series of blog posts highlighting the role of mobile money in providing safe and affordable international remittance services to the 250 million migrants and their families back home. The first blog focused on customer benefits of using mobile money as a channel for international remittances. The second blog highlighted the key findings and evidence on the role of mobile money in driving a price revolution in international remittances. This blog highlights our latest publication, released today, which looks at the early lessons from regulations governing the licensing of mobile money providers offering international remittance services.
A license is typically required to offer international remittance services in conjunction with a mobile money service. In this publication, our analysis[i] of the licensing frameworks under various regulatory regimes in Latin America, Africa and Asia suggests that licensing models vary in different markets. In Rwanda[ii] for instance, licensed electronic money providers are authorised to provide inbound and outbound international remittance services. Ghana[iii] has taken a more conservative approach permitting electronic money issuers to offer only inbound international remittance services. In contrast, the electronic money regulations of Paraguay[iv] prohibit electronic money issuers from providing international remittance services at all.
Variations in these models reflect national policy objectives. Regulators need to ensure a balance between risks and benefits. This publication highlights what regulators[v] look for when assessing the license application. It is a fact that licensing models can considerably impact market dynamics and competition. For instance, in markets where separate licenses are required for domestic payments and for international remittances, compliance with both regulatory frameworks can pose commercial and operational challenges, reducing the agility of providers.
Although mobile money has demonstrated that it can serve the needs of both international remittance senders and receivers, particularly for low-value transactions, the full potential of mobile money has not been realised. This is in part because of protracted approval processes, receive-only licenses, and a lack of procedural efficiency to enable mobile money remittances to scale quickly through the use of hubs. Out of the 51 countries where mobile money-enabled international remittance services are live, only a third allow the service to be used for both sending and receiving remittances. If regulators in all of these countries allowed sending, particularly along expensive intra-regional corridors, imagine the impact on global policy objectives such as UN’s Sustainable Development Goals.
In the full publication, in addition to assessing the different licensing frameworks, we have highlighted important considerations around these frameworks and explored the benefits of permitting internationally licensed remittance hubs to provide services to mobile money providers. The GSMA has also taken the lead in drafting a license application check-list[vi] for use as a baseline in the debate about whether licensing requirements for international remittances can be better harmonised.
We would strongly encourage policy-makers, regulators and service providers to review this publication. It reflects an initial effort to document best practices in the hope of accelerating their adoption and of bringing together international stakeholders to achieve global policy objectives on international remittances.
[i] December 2016
[ii] Article 27 of the National Bank of Rwanda’s Regulations Governing Electronic Money Issuers
[iii] Section 11 of the Bank of Ghana’s Guidelines for E-Money Issuers
[iv] The new regulations came into effect in 2014, and Tigo (Millicom) had to close its international remittance service in Paraguay after acquiring the electronic money license
[v] Central Banks of Ghana, Swaziland, Uganda and Rwanda
[vi] The purpose of this check-list is to serve as guidelines in jurisdictions where a check-list is not available. The GSMA does not, in any way, attempt to over-ride the documentation requirements stated by any regulator. It is the applicant’s responsibility to check with the local regulator to ensure that the documents being submitted in support of the application are adequate and fulfil the application criteria. The GSMA and / or the author cannot be held liable for any loss whatsoever.