The new Electronic Payments Systems Regulations 2019, introduced in January 1st by the Bank of Botswana (BoB), do not explicitly protect the mobile money customers from exorbitant transaction fees charged by the mobile money operators, KEABETSWE NEWEL reports.
There has been an outcry that because of lack of clarity on how mobile money was regulated, exorbitant transaction fees and charges were imposed on customers to maximise profits. The Botswana Gazette asked BoB Head of Communications and Information Services Dr. Seamogano Mosanako if this was true to the best of her knowledge. In response, she said the primary objective of the EPS Regulations 2019 is to ensure that actors provide these services in a safer, secure and transparent manner, consistent with the Banks overarching oversight responsibility over all payments system providers in Botswana.
“While issues of prices of services are relevant from the point of consumer protection, the primary focus of this regulation is market conduct, proper governance, risk management and transparent pricing services,” she said, confirming indirectly that the new regulations will not in explicit terms protect the consumer against exorbitant charges by mobile money operators.
Mobile money is operated by Mobile Network Operators (MNOs), Orange Botswana, Mascom Wireless and Botswana Telecommunications Corporation Limited (BTCL). Botswana Post through its Poso Money, also is into mobile money.
Transaction charges, especially the withdrawal fees charges by these operators are ridiculously high, so much that they are almost 100 times higher than withdrawal fees charged by the commercial banks.
Through an Orange Money account, one pays a staggering P92 just to withdraw P3001 using the Orange Money VISA card on an ATM or just over the counter in a retail store. The same charge applies to BTCL while Mascom Wireless, the biggest MNO in Botswana, charges P99 just to withdraw P2001.
There are other transaction charges when customers purchase electricity, pay DSTV or other services. While the central bank, led by Governor Moses Pelaelo is well aware of these heavy charges on Batswana, the bank’s new regulations give the mobile money operators a leeway to charge as they please. The bank however hopes that prices will be reduced as competition intensifies.
Dr. Mosanako said it is expected that the new Regulation will spur competition and lower costs.
“The Bank is informed that the current charges cover ATM infrastructure owned by commercial banks and clearing and settlement services provided through an external Visa Switch. The charges are expected to become competitive in future as the National Payment System becomes modernised with attainment of full interoperable infrastructures among banks and Mobile Network Operators (MNOs),” she said in an emailed response.
As is the practice amongst regulators worldwide, The Botswana Gazette asked the central bank if it will approve the mobile money fees and charges before they are introduced to the market, Dr. Mosanako said the BoB will not have any oversight in mobile money charges. She said the Bank regulation encourages transparent and fair pricing by all operators.
“Prices are market determined and the Bank will continue to engage all regulated entities on a need basis to ensure that customers receive value for money and that adopted pricing strategies do not deter the public objective of financial inclusion,” she replied.
The new EPS regulations according to the bank, cover only matters relating to the provision of financial services and, in this regard, financial services (mobile money) offered by Mobile Network Operators (MNOs). Dr. Mosanako said the Bank cooperates/collaborates with other regulatory authorities to ensure adequate coverage of institution and activity regulation, thus mitigate regulatory and oversight gaps relating to the provision of mobile money products and services. Furthermore, she said there are other electronic payment services offered by MNOs, which also fall under the purview of these new regulations.
Asked on how the new regulations will benefit customers, she said the promulgation and implementation of the EPS regulation will provide a sound legal basis for the development of the industry. Second, she said it is expected to promote innovation, with massive benefits to the economy with respect to the provision of financial services to a large number of people in relatively cheaper ways. Third, she added that a well-regulated industry allows for orderly development of a competitive, safe and sound market, as well as give the public confidence that the conduct of business will be fair to consumers.
“Finally, in general, the EPS Regulations are expected to promote financial inclusion,” she said.
Dr. Mosanako said Mascom, Botswana Post, Orange and BTC Mobile are now required to register separate companies for the service, provide P2 million as minimum capital and adhere to strict anti-money laundering provisions. She said the minimum capital requirement is to ensure that there is availability of cash for customers to transact at all times, and to ensure sustainability of the mobile money company. The companies are required to maintain at least P2 million as an ongoing capital requirement and adhere to strict account and cash management protocols including monthly reports to the BoB.
Further, she said the EPS regulations establish a legal framework for licensing, regulation and oversight for payments and service providers, consistent with the bank’s mandate of ensuring an efficient payment mechanism.
The regulations make provision for the types of entities permitted to offer electronic payment services in Botswana, entry requirements, governance and market conduct issues.
Bank of Botswana will now vet all senior officers appointed to run mobile money services and these will have to pass the same “fit and proper” test applied to commercial banks.
The new regulations also set the maximum limit for a single mobile money transaction at P5,000, the limit for daily transactions at P10,000 for any customer and the monthly aggregated limit at P20,000. The limits are generally higher than what existing mobile money services provide with Orange Money’s daily limit at P4,000 and monthly limit at P7,000.
Mobile money services began in the country at around June 2011. It was introduced by the mobile phone companies, which at that time, were taking advantage of the serious need for financial inclusion.
Many people in the rural and remote areas had no access to financial services offered mostly by the commercial banks. Further, some people did not qualify to access financial services because of lack of formal employment. In Botswana the value of transactions grew from P175 million in 2011 and it is now valued at over P1 billion. Orange Money led the pack with about 752,000 subscribers as at March 2019. Mascom’s MyZaka has around 398,000 subscribers.
BTC Mobile’s SMEGA, trails the market with 240 subscribers.
As of June 2016 Orange Money accounted for 24 percent of the Debits Cards in the country. The use of debit card to participate in financial transactions was reported to make Orange Money the leading company at a total of 70 percent. The visa also meant that clients could carry out online shopping from across the globe at the touch of the pad and transact electronically, this service is available 24/7 and to add cherry on top it taking advantage of over more than 300 ATMS that exists locally and banking infrastructure, additionally point of sale transactions were some of the benefits that came with the visa upgrade.