Kenya’s Banks ask for regulation on Mobile Money Transfers
(From Balancing Act) Kenya’s Banks ask for regulation on Mobile Money Transfers The banking fraternity is crying foul over what it described as unfair and increasing competition from money transfer operators. The industry says the operators are enjoying privileges similar to those extended to deposit taking institutions despite not being covered by the same regulatory regime. "Currently, there is no legal framework within which these entities provide their services despite behaving like current account institutions," says John Wanyela, executive director of the Kenya Bankers Association. "If these operators want to join the financial sector, they have to be properly licensed." The bankers are calling on the government to subject the services to prudential regulations "for robust and secure movement of funds across the economy." Under the proposed guideline, the services will have to be supervised by a specialised financial regulatory authority that will oversee their financial soundness and stability. Currently, the two leading mobile phone service providers - Zain and Safaricom - are offering money-transfer services in the country under Sokotele and M-Pesa brands respectively. Like other deposit takers, the bankers association wants the mobile cash transfer operators restricted on how much deposits they can take. To avert undue competition with the banking fraternity, Wanyela says, M-Pesa and Sokotele services have to meet the capitalisation requirement as stipulated in the Banking Act. According to the Act, a deposit taking institution should maintain a minimum capitalisation of Ksh250 million ($3.5 million). This is however expected to double come December next year before hitting Ksh1 billion ($14.2 million) by 2010 after capitalisation requirements were amended in this financial year's budget. The bankers also say the "digital money" has implications for the conduct of monetary policy by the Central Bank of Kenya. To control inflation levels in the country, CBK continuously monitors the amount of money in circulation, mainly in the hands of people and commercial banks. With the monies in circulation, CBK is in a position to maintain a reserve money target and, therefore, intervene to control inflation. Observers say it is this huge amount of money circulating electronically that has defeated CBK in the fight against inflation. Wanyela says it is time the government stepped in to ensure M-Pesa and Sokotele services are regulated before "something goes wrong." Debate has been rife on who should regulate the mobile phone money transfer operators, with some arguing that the CBK should be party to the issuance of guidelines as "part of M-Pesa and Sokotele services fall under the national payments system." Fundamentally, the two mobile operations are guided by the Communications Commission of Kenya. Early last month, CBK said it had no intention of bringing the mobile cash transfer services under the Banking Act. It claimed that treating the money transfer services under the Act may impede competition in sector that is still at its infancy in a country whose majority population has limited access to financial services. Safaricom statistics show that as at the end of the first quarter of this year, more than Ksh3.1 billion ($44.2 million) had been transferred. From its launch in March 2007 till May this year, the service has facilitated the transfer of more than Ksh23.77 billion ($339.5 million). (Source: The East African) For further information on mobile payments in Africa purchase Balancing Act’s report “M-Money - Finances, Banking and Payments through mobile phones”
Here's an article from the net : Big Banks crush Mobile Innovation in Bangladesh ?: "Banks, the traditional leader in payment systems, see mobile banking as a new threat if private telecom operators are allowed to use their outlets for money transfer without law," writes journalist Sajjadur Rahman. I don't know what he means by "without law", but I do know what's behind this quote by a government official: "We won't let anything, which hurts the banking industry, happen." It is a classic example of powerful lobbyists delaying a new technology to protect their industry interests. Mobile banking allows any mobile phone customer to deposit money into his or her phone account at any mobile phone outlet (which are everywhere in countries like Bangladesh) and transfer that money to any other mobile phone user. M-PESA in Kenya has shown<http://startupkenya.blogspot.com/2008/08/cheers-and-jeers-for-m-pesa.html>how this can bring basic banking services to millions of rural residents who would otherwise never open a traditional bank account. Mahmud Sattar, president of the Association of Banks of Bangladesh, offered this line to the *Daily Star*: "We have given our opinions at the meeting and told the central bank that banks have no objection to using modern technology as a tool of expanding delivery channels." The problem is that banks aren't in the position to introduce mobile banking whereas phone companies are. If mobile banking services are not introduced, it is the rural poor who are denied the services. Just ten days ago Mark Pickens wrote an article at CGAP<http://technology.cgap.org/2008/08/18/should-banks-play-offense-or-defense-with-the-poor/>, which says that traditional banks in Kenya are irked<http://www.eastandard.net/InsidePage.php?id=1143992228&cid=457>that Safaricom is able to operate its M-PESA mobile banking service with so few regulations in place. With 2.7 million clients, it may be that M-PESA became too successful too fast and, having learned their lessons, banks in other developing countries won't allow mobile phone companies to dig into such a large market share. http://www.thedailystar.net/story.php?nid=52017 http://technology.cgap.org/2008/08/18/should-banks-play-offense-or-defense-w... On Sat, Oct 18, 2008 at 1:21 PM, alice <alice@apc.org> wrote:
(From Balancing Act)
Kenya's Banks ask for regulation on Mobile Money Transfers
The banking fraternity is crying foul over what it described as unfair and increasing competition from money transfer operators. The industry says the operators are enjoying privileges similar to those extended to deposit taking institutions despite not being covered by the same regulatory regime.
"Currently, there is no legal framework within which these entities provide their services despite behaving like current account institutions," says John Wanyela, executive director of the Kenya Bankers Association. "If these operators want to join the financial sector, they have to be properly licensed."
The bankers are calling on the government to subject the services to prudential regulations "for robust and secure movement of funds across the economy." Under the proposed guideline, the services will have to be supervised by a specialised financial regulatory authority that will oversee their financial soundness and stability.
Currently, the two leading mobile phone service providers - Zain and Safaricom - are offering money-transfer services in the country under Sokotele and M-Pesa brands respectively. Like other deposit takers, the bankers association wants the mobile cash transfer operators restricted on how much deposits they can take.
To avert undue competition with the banking fraternity, Wanyela says, M-Pesa and Sokotele services have to meet the capitalisation requirement as stipulated in the Banking Act. According to the Act, a deposit taking institution should maintain a minimum capitalisation of Ksh250 million ($3.5 million).
This is however expected to double come December next year before hitting Ksh1 billion ($14.2 million) by 2010 after capitalisation requirements were amended in this financial year's budget. The bankers also say the "digital money" has implications for the conduct of monetary policy by the Central Bank of Kenya.
To control inflation levels in the country, CBK continuously monitors the amount of money in circulation, mainly in the hands of people and commercial banks. With the monies in circulation, CBK is in a position to maintain a reserve money target and, therefore, intervene to control inflation. Observers say it is this huge amount of money circulating electronically that has defeated CBK in the fight against inflation.
Wanyela says it is time the government stepped in to ensure M-Pesa and Sokotele services are regulated before "something goes wrong." Debate has been rife on who should regulate the mobile phone money transfer operators, with some arguing that the CBK should be party to the issuance of guidelines as "part of M-Pesa and Sokotele services fall under the national payments system."
Fundamentally, the two mobile operations are guided by the Communications Commission of Kenya. Early last month, CBK said it had no intention of bringing the mobile cash transfer services under the Banking Act.
It claimed that treating the money transfer services under the Act may impede competition in sector that is still at its infancy in a country whose majority population has limited access to financial services.
Safaricom statistics show that as at the end of the first quarter of this year, more than Ksh3.1 billion ($44.2 million) had been transferred. From its launch in March 2007 till May this year, the service has facilitated the transfer of more than Ksh23.77 billion ($339.5 million). (Source: The East African)
For further information on mobile payments in Africa purchase Balancing Act's report "M-Money - Finances, Banking and Payments through mobile phones"
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Hi, I think the banks should not go for regulation as a way of checking the mobile phone money transfers. They should instead see how they can partner with the mobile phone operators in delivering a secure service to the majority of the people (potential bank customers). The banks could offer the banking services and the mobile phone operators provide the platform. This is not the first non-bank money transfer service in the country. There was the now obsolete Telegraphic Money Order (TMO), which the banks did not challenge as it is doing now. The difference is that the M-Pesa and Sokotele are using a device (mobile phone) that is conveniently in the reach of millions of citizens, hence the fast growth. But the needs driving this service are the same ones during the days of the TMO; mostly sending money to rural folks and small business transactions. Jotham K. Mwale --- On Sun, 10/19/08, aki <aki275@googlemail.com> wrote: From: aki <aki275@googlemail.com> Subject: Re: [kictanet] Kenya’s Banks ask for regulation on Mobile Money Transfers To: jokilimo@yahoo.com Cc: "KICTAnet ICT Policy Discussions" <kictanet@lists.kictanet.or.ke> Date: Sunday, October 19, 2008, 1:29 AM Here's an article from the net : Big Banks crush Mobile Innovation in Bangladesh ?: "Banks, the traditional leader in payment systems, see mobile banking as a new threat if private telecom operators are allowed to use their outlets for money transfer without law," writes journalist Sajjadur Rahman. I don't know what he means by "without law", but I do know what's behind this quote by a government official: "We won't let anything, which hurts the banking industry, happen." It is a classic example of powerful lobbyists delaying a new technology to protect their industry interests. Mobile banking allows any mobile phone customer to deposit money into his or her phone account at any mobile phone outlet (which are everywhere in countries like Bangladesh) and transfer that money to any other mobile phone user. M-PESA in Kenya has shown how this can bring basic banking services to millions of rural residents who would otherwise never open a traditional bank account. Mahmud Sattar, president of the Association of Banks of Bangladesh, offered this line to the Daily Star: "We have given our opinions at the meeting and told the central bank that banks have no objection to using modern technology as a tool of expanding delivery channels." The problem is that banks aren't in the position to introduce mobile banking whereas phone companies are. If mobile banking services are not introduced, it is the rural poor who are denied the services. Just ten days ago Mark Pickens wrote an article at CGAP, which says that traditional banks in Kenya are irked that Safaricom is able to operate its M-PESA mobile banking service with so few regulations in place. With 2.7 million clients, it may be that M-PESA became too successful too fast and, having learned their lessons, banks in other developing countries won't allow mobile phone companies to dig into such a large market share. http://www.thedailystar.net/story.php?nid=52017 http://technology.cgap.org/2008/08/18/should-banks-play-offense-or-defense-w... On Sat, Oct 18, 2008 at 1:21 PM, alice <alice@apc.org> wrote: (From Balancing Act) Kenya's Banks ask for regulation on Mobile Money Transfers The banking fraternity is crying foul over what it described as unfair and increasing competition from money transfer operators. The industry says the operators are enjoying privileges similar to those extended to deposit taking institutions despite not being covered by the same regulatory regime. "Currently, there is no legal framework within which these entities provide their services despite behaving like current account institutions," says John Wanyela, executive director of the Kenya Bankers Association. "If these operators want to join the financial sector, they have to be properly licensed." The bankers are calling on the government to subject the services to prudential regulations "for robust and secure movement of funds across the economy." Under the proposed guideline, the services will have to be supervised by a specialised financial regulatory authority that will oversee their financial soundness and stability. Currently, the two leading mobile phone service providers - Zain and Safaricom - are offering money-transfer services in the country under Sokotele and M-Pesa brands respectively. Like other deposit takers, the bankers association wants the mobile cash transfer operators restricted on how much deposits they can take. To avert undue competition with the banking fraternity, Wanyela says, M-Pesa and Sokotele services have to meet the capitalisation requirement as stipulated in the Banking Act. According to the Act, a deposit taking institution should maintain a minimum capitalisation of Ksh250 million ($3.5 million). This is however expected to double come December next year before hitting Ksh1 billion ($14.2 million) by 2010 after capitalisation requirements were amended in this financial year's budget. The bankers also say the "digital money" has implications for the conduct of monetary policy by the Central Bank of Kenya. To control inflation levels in the country, CBK continuously monitors the amount of money in circulation, mainly in the hands of people and commercial banks. With the monies in circulation, CBK is in a position to maintain a reserve money target and, therefore, intervene to control inflation. Observers say it is this huge amount of money circulating electronically that has defeated CBK in the fight against inflation. Wanyela says it is time the government stepped in to ensure M-Pesa and Sokotele services are regulated before "something goes wrong." Debate has been rife on who should regulate the mobile phone money transfer operators, with some arguing that the CBK should be party to the issuance of guidelines as "part of M-Pesa and Sokotele services fall under the national payments system." Fundamentally, the two mobile operations are guided by the Communications Commission of Kenya. Early last month, CBK said it had no intention of bringing the mobile cash transfer services under the Banking Act. It claimed that treating the money transfer services under the Act may impede competition in sector that is still at its infancy in a country whose majority population has limited access to financial services. Safaricom statistics show that as at the end of the first quarter of this year, more than Ksh3.1 billion ($44.2 million) had been transferred. From its launch in March 2007 till May this year, the service has facilitated the transfer of more than Ksh23.77 billion ($339.5 million). (Source: The East African) For further information on mobile payments in Africa purchase Balancing Act's report "M-Money - Finances, Banking and Payments through mobile phones" _______________________________________________ kictanet mailing list kictanet@lists.kictanet.or.ke http://lists.kictanet.or.ke/mailman/listinfo/kictanet This message was sent to: aki275@gmail.com Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/aki275%40gmail.com -- Blog http://aki-opensource.blogspot.com/ _______________________________________________ kictanet mailing list kictanet@lists.kictanet.or.ke http://lists.kictanet.or.ke/mailman/listinfo/kictanet This message was sent to: jokilimo@yahoo.com Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/jokilimo%40yahoo.com
Hi Jothan, Banks in Kenya have long frutstrated e-commerce because it makes them lose the "central" transactions role. In that old world, banks ruled! recall <http://www.relfe.com/plus_5_.html>. Kenyan M-PESA innovation (hata ikiitwa ni ya nani?) has caused global ripples "Big Banks Crush Mobile Innovation in Bangladesh" <http://el-oso.net/blog/archives/2008/08/28/big-banks-crush-mobile-innovation-in-bangladesh/en/> What the future? 1. To be on high alert in ensuring super mobicoms do not crush newer innovations.. 2. Banks embrace e-commerce else they perish completely into irrelevance history 3. There's evidence Kenyan officials are opposite of Bangladeshi bank-protectionists:) Alex On Tue, Oct 21, 2008 at 9:41 AM, Jotham Kilimo <jokilimo@yahoo.com> wrote:
Hi,
I think the banks should not go for regulation as a way of checking the mobile phone money transfers. They should instead see how they can partner with the mobile phone operators in delivering a secure service to the majority of the people (potential bank customers). The banks could offer the banking services and the mobile phone operators provide the platform.
This is not the first non-bank money transfer service in the country. There was the now obsolete Telegraphic Money Order (TMO), which the banks did not challenge as it is doing now. The difference is that the M-Pesa and Sokotele are using a device (mobile phone) that is conveniently in the reach of millions of citizens, hence the fast growth. But the needs driving this service are the same ones during the days of the TMO; mostly sending money to rural folks and small business transactions.
Jotham K. Mwale
--- On Sun, 10/19/08, aki <aki275@googlemail.com> wrote:
From: aki <aki275@googlemail.com> Subject: Re: [kictanet] Kenya's Banks ask for regulation on Mobile Money Transfers To: jokilimo@yahoo.com Cc: "KICTAnet ICT Policy Discussions" <kictanet@lists.kictanet.or.ke> Date: Sunday, October 19, 2008, 1:29 AM
Here's an article from the net : Big Banks crush Mobile Innovation in Bangladesh ?:
"Banks, the traditional leader in payment systems, see mobile banking as a new threat if private telecom operators are allowed to use their outlets for money transfer without law," writes journalist Sajjadur Rahman. I don't know what he means by "without law", but I do know what's behind this quote by a government official: "We won't let anything, which hurts the banking industry, happen." It is a classic example of powerful lobbyists delaying a new technology to protect their industry interests. Mobile banking allows any mobile phone customer to deposit money into his or her phone account at any mobile phone outlet (which are everywhere in countries like Bangladesh) and transfer that money to any other mobile phone user. M-PESA in Kenya has shown how this can bring basic banking services to millions of rural residents who would otherwise never open a traditional bank account. Mahmud Sattar, president of the Association of Banks of Bangladesh, offered this line to the Daily Star: "We have given our opinions at the meeting and told the central bank that banks have no objection to using modern technology as a tool of expanding delivery channels." The problem is that banks aren't in the position to introduce mobile banking whereas phone companies are. If mobile banking services are not introduced, it is the rural poor who are denied the services. Just ten days ago Mark Pickens wrote an article at CGAP, which says that traditional banks in Kenya are irked that Safaricom is able to operate its M-PESA mobile banking service with so few regulations in place. With 2.7 million clients, it may be that M-PESA became too successful too fast and, having learned their lessons, banks in other developing countries won't allow mobile phone companies to dig into such a large market share. http://www.thedailystar.net/story.php?nid=52017
http://technology.cgap.org/2008/08/18/should-banks-play-offense-or-defense-w...
On Sat, Oct 18, 2008 at 1:21 PM, alice <alice@apc.org> wrote:
(From Balancing Act)
Kenya's Banks ask for regulation on Mobile Money Transfers
The banking fraternity is crying foul over what it described as unfair and increasing competition from money transfer operators. The industry says the operators are enjoying privileges similar to those extended to deposit taking institutions despite not being covered by the same regulatory regime.
"Currently, there is no legal framework within which these entities provide their services despite behaving like current account institutions," says John Wanyela, executive director of the Kenya Bankers Association. "If these operators want to join the financial sector, they have to be properly licensed."
The bankers are calling on the government to subject the services to prudential regulations "for robust and secure movement of funds across the economy." Under the proposed guideline, the services will have to be supervised by a specialised financial regulatory authority that will oversee their financial soundness and stability.
Currently, the two leading mobile phone service providers - Zain and Safaricom - are offering money-transfer services in the country under Sokotele and M-Pesa brands respectively. Like other deposit takers, the bankers association wants the mobile cash transfer operators restricted on how much deposits they can take.
To avert undue competition with the banking fraternity, Wanyela says, M-Pesa and Sokotele services have to meet the capitalisation requirement as stipulated in the Banking Act. According to the Act, a deposit taking institution should maintain a minimum capitalisation of Ksh250 million ($3.5 million).
This is however expected to double come December next year before hitting Ksh1 billion ($14.2 million) by 2010 after capitalisation requirements were amended in this financial year's budget. The bankers also say the "digital money" has implications for the conduct of monetary policy by the Central Bank of Kenya.
To control inflation levels in the country, CBK continuously monitors the amount of money in circulation, mainly in the hands of people and commercial banks. With the monies in circulation, CBK is in a position to maintain a reserve money target and, therefore, intervene to control inflation. Observers say it is this huge amount of money circulating electronically that has defeated CBK in the fight against inflation.
Wanyela says it is time the government stepped in to ensure M-Pesa and Sokotele services are regulated before "something goes wrong." Debate has been rife on who should regulate the mobile phone money transfer operators, with some arguing that the CBK should be party to the issuance of guidelines as "part of M-Pesa and Sokotele services fall under the national payments system."
Fundamentally, the two mobile operations are guided by the Communications Commission of Kenya. Early last month, CBK said it had no intention of bringing the mobile cash transfer services under the Banking Act.
It claimed that treating the money transfer services under the Act may impede competition in sector that is still at its infancy in a country whose majority population has limited access to financial services.
Safaricom statistics show that as at the end of the first quarter of this year, more than Ksh3.1 billion ($44.2 million) had been transferred. From its launch in March 2007 till May this year, the service has facilitated the transfer of more than Ksh23.77 billion ($339.5 million). (Source: The East African)
For further information on mobile payments in Africa purchase Balancing Act's report "M-Money - Finances, Banking and Payments through mobile phones"
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Hi,
I think the banks should not go for regulation as a way of checking the mobile phone money transfers. They should instead see how they can partner with the mobile phone operators in delivering a secure service to the majority of the people (potential bank customers). The banks could offer
banking services and the mobile phone operators provide the platform.
This is not the first non-bank money transfer service in the country. There was the now obsolete Telegraphic Money Order (TMO), which the banks did not challenge as it is doing now. The difference is that the M-Pesa and Sokotele are using a device (mobile phone) that is conveniently in the reach of millions of citizens, hence the fast growth. But the needs driving this service are the same ones during the days of the TMO; mostly sending money to rural folks and small business transactions.
Jotham K. Mwale
--- On Sun, 10/19/08, aki <aki275@googlemail.com> wrote:
From: aki <aki275@googlemail.com> Subject: Re: [kictanet] Kenya's Banks ask for regulation on Mobile Money Transfers To: jokilimo@yahoo.com Cc: "KICTAnet ICT Policy Discussions" <kictanet@lists.kictanet.or.ke> Date: Sunday, October 19, 2008, 1:29 AM
Here's an article from the net : Big Banks crush Mobile Innovation in Bangladesh ?:
"Banks, the traditional leader in payment systems, see mobile banking as a new threat if private telecom operators are allowed to use their outlets for money transfer without law," writes journalist Sajjadur Rahman. I don't know what he means by "without law", but I do know what's behind
government official: "We won't let anything, which hurts the banking industry, happen." It is a classic example of powerful lobbyists delaying a new technology to protect their industry interests. Mobile banking allows any mobile phone customer to deposit money into his or her phone account at any mobile
outlet (which are everywhere in countries like Bangladesh) and transfer
The same way ppl stopped barter trading, they will move from the traditional banking ways i.e. transacting in physical money, going to the bank to withdraw or deposit, etc as new technologies are developed and improved. I would think these bank guys would learn somthing from the success in using mobile for payments. It might be unfair that the mobile ops are not following some regulations but IMHO that should not shadow the success of the solution. These regulations should be there to help make the solution better for the ppl. --- On Tue, 10/21/08, Gakuru Alex <alexgakuru.lists@gmail.com> wrote: From: Gakuru Alex <alexgakuru.lists@gmail.com> Subject: Re: [kictanet] Kenya’s Banks ask for regulation on Mobile Money Transfers To: kiriinya2000@yahoo.com Cc: kictanet@lists.kictanet.or.ke Date: Tuesday, October 21, 2008, 10:32 AM Hi Jothan, Banks in Kenya have long frutstrated e-commerce because it makes them lose the "central" transactions role. In that old world, banks ruled! recall <http://www.relfe.com/plus_5_.html>. Kenyan M-PESA innovation (hata ikiitwa ni ya nani?) has caused global ripples "Big Banks Crush Mobile Innovation in Bangladesh" <http://el-oso.net/blog/archives/2008/08/28/big-banks-crush-mobile-innovation-in-bangladesh/en/> What the future? 1. To be on high alert in ensuring super mobicoms do not crush newer innovations.. 2. Banks embrace e-commerce else they perish completely into irrelevance history 3. There's evidence Kenyan officials are opposite of Bangladeshi bank-protectionists:) Alex On Tue, Oct 21, 2008 at 9:41 AM, Jotham Kilimo <jokilimo@yahoo.com> wrote: the this quote by a phone that
money to any other mobile phone user. M-PESA in Kenya has shown how this can bring basic banking services to millions of rural residents who would otherwise never open a traditional bank account. Mahmud Sattar, president of the Association of Banks of Bangladesh, offered this line to the Daily Star: "We have given our opinions at the meeting and told the central bank that banks have no objection to using modern technology as a tool of expanding delivery channels." The problem is that banks aren't in the position to introduce mobile banking whereas phone companies are. If mobile banking services are not introduced, it is the rural poor who are denied the services. Just ten days ago Mark Pickens wrote an article at CGAP, which says that traditional banks in Kenya are irked that Safaricom is able to operate its M-PESA mobile banking service with so few regulations in place. With 2.7 million clients, it may be that M-PESA became too successful too fast and, having learned their lessons, banks in other developing countries won't allow mobile phone companies to dig into such a large market share. http://www.thedailystar.net/story.php?nid=52017
http://technology.cgap.org/2008/08/18/should-banks-play-offense-or-defense-w...
On Sat, Oct 18, 2008 at 1:21 PM, alice <alice@apc.org> wrote:
(From Balancing Act)
Kenya's Banks ask for regulation on Mobile Money Transfers
The banking fraternity is crying foul over what it described as unfair and increasing competition from money transfer operators. The industry says the operators are enjoying privileges similar to those extended
deposit taking institutions despite not being covered by the same regulatory regime.
"Currently, there is no legal framework within which these entities provide their services despite behaving like current account institutions," says John Wanyela, executive director of the Kenya Bankers Association. "If these operators want to join the financial sector, they have to be properly licensed."
The bankers are calling on the government to subject the services to prudential regulations "for robust and secure movement of funds across the economy." Under the proposed guideline, the services will have to be supervised by a specialised financial regulatory authority that will oversee their financial soundness and stability.
Currently, the two leading mobile phone service providers - Zain and Safaricom - are offering money-transfer services in the country under Sokotele and M-Pesa brands respectively. Like other deposit takers,
bankers association wants the mobile cash transfer operators restricted on how much deposits they can take.
To avert undue competition with the banking fraternity, Wanyela says, M-Pesa and Sokotele services have to meet the capitalisation requirement as stipulated in the Banking Act. According to the Act, a deposit taking institution should maintain a minimum capitalisation of Ksh250 million ($3.5 million).
This is however expected to double come December next year before hitting Ksh1 billion ($14.2 million) by 2010 after capitalisation requirements were amended in this financial year's budget. The bankers also say the "digital money" has implications for the conduct of monetary policy by the Central Bank of Kenya.
To control inflation levels in the country, CBK continuously monitors the amount of money in circulation, mainly in the hands of people and commercial banks. With the monies in circulation, CBK is in a position to maintain a reserve money target and, therefore, intervene to control inflation. Observers say it is this huge amount of money circulating electronically that has defeated CBK in the fight against inflation.
Wanyela says it is time the government stepped in to ensure M-Pesa and Sokotele services are regulated before "something goes wrong." Debate has been rife on who should regulate the mobile phone money transfer operators, with some arguing that the CBK should be party to the issuance of guidelines as "part of M-Pesa and Sokotele services fall under the national payments system."
Fundamentally, the two mobile operations are guided by the Communications Commission of Kenya. Early last month, CBK said it had no intention of bringing the mobile cash transfer services under the Banking Act.
It claimed that treating the money transfer services under the Act may impede competition in sector that is still at its infancy in a country whose majority population has limited access to financial services.
Safaricom statistics show that as at the end of the first quarter of this year, more than Ksh3.1 billion ($44.2 million) had been transferred. From its launch in March 2007 till May this year, the service has facilitated the transfer of more than Ksh23.77 billion ($339.5 million). (Source: The East African)
For further information on mobile payments in Africa purchase Balancing Act's report "M-Money - Finances, Banking and Payments
to the through mobile
phones"
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Hey what's up with these Banks who give their customers a real raw deal anyway!! The banks have never done anything for the people other than use them! Now they want to crush the one system that helps and allows the rich and the poor and marginalised to send funds without having to pay the drastic fees the banks charge. Everytime there is something that works for the masses and not just the priviledged there is an uproar to defeat the purpose!! The banks need the competition so they can learn to respect all. People in business in Kenya have for too long ripped off the wanainchi and they will have to learn to respect the consumers. Good on CBK not to agree bring M-Pesa and the like under their ACT. It shouldn't be allowed to operate without rules and regulations of course, to protect peoples money but we should do all possible to help technology take root that can help the people. My opinion entirely! On 10/18/08, alice <alice@apc.org> wrote:
(From Balancing Act)
Kenya's Banks ask for regulation on Mobile Money Transfers
The banking fraternity is crying foul over what it described as unfair and increasing competition from money transfer operators. The industry says the operators are enjoying privileges similar to those extended to deposit taking institutions despite not being covered by the same regulatory regime.
"Currently, there is no legal framework within which these entities provide their services despite behaving like current account institutions," says John Wanyela, executive director of the Kenya Bankers Association. "If these operators want to join the financial sector, they have to be properly licensed."
The bankers are calling on the government to subject the services to prudential regulations "for robust and secure movement of funds across the economy." Under the proposed guideline, the services will have to be supervised by a specialised financial regulatory authority that will oversee their financial soundness and stability.
Currently, the two leading mobile phone service providers - Zain and Safaricom - are offering money-transfer services in the country under Sokotele and M-Pesa brands respectively. Like other deposit takers, the bankers association wants the mobile cash transfer operators restricted on how much deposits they can take.
To avert undue competition with the banking fraternity, Wanyela says, M-Pesa and Sokotele services have to meet the capitalisation requirement as stipulated in the Banking Act. According to the Act, a deposit taking institution should maintain a minimum capitalisation of Ksh250 million ($3.5 million).
This is however expected to double come December next year before hitting Ksh1 billion ($14.2 million) by 2010 after capitalisation requirements were amended in this financial year's budget. The bankers also say the "digital money" has implications for the conduct of monetary policy by the Central Bank of Kenya.
To control inflation levels in the country, CBK continuously monitors the amount of money in circulation, mainly in the hands of people and commercial banks. With the monies in circulation, CBK is in a position to maintain a reserve money target and, therefore, intervene to control inflation. Observers say it is this huge amount of money circulating electronically that has defeated CBK in the fight against inflation.
Wanyela says it is time the government stepped in to ensure M-Pesa and Sokotele services are regulated before "something goes wrong." Debate has been rife on who should regulate the mobile phone money transfer operators, with some arguing that the CBK should be party to the issuance of guidelines as "part of M-Pesa and Sokotele services fall under the national payments system."
Fundamentally, the two mobile operations are guided by the Communications Commission of Kenya. Early last month, CBK said it had no intention of bringing the mobile cash transfer services under the Banking Act.
It claimed that treating the money transfer services under the Act may impede competition in sector that is still at its infancy in a country whose majority population has limited access to financial services.
Safaricom statistics show that as at the end of the first quarter of this year, more than Ksh3.1 billion ($44.2 million) had been transferred. From its launch in March 2007 till May this year, the service has facilitated the transfer of more than Ksh23.77 billion ($339.5 million). (Source: The East African)
For further information on mobile payments in Africa purchase Balancing Act's report "M-Money - Finances, Banking and Payments through mobile phones"
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-- Lizette Kraft P.O. Box 18488, 00500 Nairobi, Kenya Cell: 0722-800362
From my prior research work on Mobile phone banking applications some
Kictanetists, The arrival of the radical mobile phone anchored banking service has changed the banking environment both in form and in substance. The obvious winners provided for by this innovation are mobile phone operators and their clients. Future customers will have themselves relieved of the baggage that was typical of the conservative banking; pass books, cheque books and ultimately bank notes may become extinct paving way for the dawn of a "cashless economy". Second, the nature of M-banking's invasion of what was hitherto a traditional banking terrain is devastating. It further dilutes the prospects in the banking transactions service income following soaring levels of inter-bank competition. Thus, banks need to find a different growth path that leads beyond the one they are currently following. This state of affairs also catapults technology into apposition of preeminence in banking affairs and puts traditionally engineered banks on notice that they have to contend with more robust and assertive technology solutions that will not hesitate to make incursions into the financial arena. Regulatory approach to mobile phone banking in a rapidly dynamic setting has also emerged as a critical question for consideration, thus it might be imprudent to overlook the concerns of bankers and others (Motivations aside). Still, evidence from the countries where the phone banking has gained huge momentum demonstrates that the industry will not wait to innovate while policy makers and regulators take ages to deliberate over an ideal course of action. pertinent questions that seem to require attention in this matter include: 1. Adequacy of Consumer protection - Appropriate consumer protection against risks of fraud, loss of privacy and even loss of service is extremely critical for growth of phone-banking. Risks proliferate further when agents are involved and reach to a maximum. Since a large number of clients are first time customers with low financial literacy, the risks become even higher. These risks can be mitigated by entering into mobile banking activities through known and meticulously regulated players and agents. Guidelines regarding privacy protection, network security, complaint redress mechanisms and robust mechanisms for consumer protection are fundamental as the uptake of M-Banking goes to scale. 2. Distinction between payments and deposits. The CBK as the mandated regulator under the Banking Act does not give an explicit definition of "Banking". What the CBK elaborates in its mission statement is the purpose which is cited as "for investment or borrowing". The definitions of payment and deposit either as cash or electronic lacks clarity hence the need for comprehensive distinction. 3. Stipulations for E-money and E-Transaction dealings. According to the Basel Committee definition, Electronic Money (E-Money) is a stored value or prepaid product in which a record of the funds or value available to the consumer for multipurpose use is stored on an electronic device in the consumer's possession. E-money implies "monetary value as represented by a claim on the issuer which is stored on an electronic device; issued on receipt of funds of an amount not less in value than the monetary value; issued and accepted as means of payment by undertakings other than the issuer". (Bank for International Settlements, 2004). This definition could provide a useful benchmark upon which the authorities can develop an appropriate legal framework in tune with international modes. 4. Provision for cash withdrawal and deposits by Agents. The existing guidelines by CBK have no clear provisions for agency cash withdrawal and deposits. Contractual arrangements with agents handling money on behalf of the M-Banking service provider require clear legal principles. 5. Integrating AML/CFT regulations to account opening and cash transactions. A risk-based approach should be adapted to customers' due diligence (CDD) requirements. This is already in practice for Commercial and microfinance banking institutions. Appropriate guidelines with regard to transformational banking entities are needed. Some suggestions for regulatory steps vital for implementing phone banking a) M-Banking entities ought to be brought under a suitable financial regulatory net by giving these entities a special banking status preferably a quasi-bank or remittance agent as appropriate. b) Precise definition of the supervisory structure for Mobile phone banking entities- This is in view of the fact that within the Kenyan spectacle entities of this nature will fall into two regulatory domains i.e. the Communication Commission of Kenya (CCK) and the CBK. A clear division of authorities and responsibilities should be made to ensure that different authorities coordinate without working at cross-purposes. c) Minimum requirements with respect to transparency, financial strength and liquidity for obtaining the above status d) Allowable activities for such entities including well-defined limits on nature, type and volume of transactions e) Obligation to deposit net e-banking surplus funds of such entities with scheduled banks meeting a specified rating criterion. Specific guidelines addressing various aspects of the business especially AML, CFT, customer privacy, data security, disaster recovery and business continuity, risk management and complaint redress among others. Kamotho Njenga On 10/18/08, alice <alice@apc.org> wrote:
(From Balancing Act)
Kenya's Banks ask for regulation on Mobile Money Transfers
The banking fraternity is crying foul over what it described as unfair and increasing competition from money transfer operators. The industry says the operators are enjoying privileges similar to those extended to deposit taking institutions despite not being covered by the same regulatory regime.
"Currently, there is no legal framework within which these entities provide their services despite behaving like current account institutions," says John Wanyela, executive director of the Kenya Bankers Association. "If these operators want to join the financial sector, they have to be properly licensed."
The bankers are calling on the government to subject the services to prudential regulations "for robust and secure movement of funds across the economy." Under the proposed guideline, the services will have to be supervised by a specialised financial regulatory authority that will oversee their financial soundness and stability.
Currently, the two leading mobile phone service providers - Zain and Safaricom - are offering money-transfer services in the country under Sokotele and M-Pesa brands respectively. Like other deposit takers, the bankers association wants the mobile cash transfer operators restricted on how much deposits they can take.
To avert undue competition with the banking fraternity, Wanyela says, M-Pesa and Sokotele services have to meet the capitalisation requirement as stipulated in the Banking Act. According to the Act, a deposit taking institution should maintain a minimum capitalisation of Ksh250 million ($3.5 million).
This is however expected to double come December next year before hitting Ksh1 billion ($14.2 million) by 2010 after capitalisation requirements were amended in this financial year's budget. The bankers also say the "digital money" has implications for the conduct of monetary policy by the Central Bank of Kenya.
To control inflation levels in the country, CBK continuously monitors the amount of money in circulation, mainly in the hands of people and commercial banks. With the monies in circulation, CBK is in a position to maintain a reserve money target and, therefore, intervene to control inflation. Observers say it is this huge amount of money circulating electronically that has defeated CBK in the fight against inflation.
Wanyela says it is time the government stepped in to ensure M-Pesa and Sokotele services are regulated before "something goes wrong." Debate has been rife on who should regulate the mobile phone money transfer operators, with some arguing that the CBK should be party to the issuance of guidelines as "part of M-Pesa and Sokotele services fall under the national payments system."
Fundamentally, the two mobile operations are guided by the Communications Commission of Kenya. Early last month, CBK said it had no intention of bringing the mobile cash transfer services under the Banking Act.
It claimed that treating the money transfer services under the Act may impede competition in sector that is still at its infancy in a country whose majority population has limited access to financial services.
Safaricom statistics show that as at the end of the first quarter of this year, more than Ksh3.1 billion ($44.2 million) had been transferred. From its launch in March 2007 till May this year, the service has facilitated the transfer of more than Ksh23.77 billion ($339.5 million). (Source: The East African)
For further information on mobile payments in Africa purchase Balancing Act's report "M-Money - Finances, Banking and Payments through mobile phones"
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participants (7)
-
aki -
alice -
Gakuru Alex -
Jotham Kilimo -
kamotho Njenga -
Lizette Kraft -
wesley kiriinya