Page 190 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

In August of 2015, BB released draft MFS regulations meant to encourage greater competition by limiting the
ownership structure of banks in MFS businesses. However, the draft proved controversial and its ability to
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support competition in DFS, amongst other policy objectives, was disputed. The updated regulations and as
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yet have not yet been implemented. The MNOs are currently lobbying the government to be able to provide
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a full suite of DFS services as offered by bKash, an effort supported by the State Minister for Telecom.
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MNOs have been providing different payment services, such as utility bill payment, train ticketing, cricket match
tickets, airtime top-ups, and lottery tickets since 2006. For each of these services, the MNOs have obtained
approvals from Bangladesh Telecommunication Regulatory Commission (BTRC) under the purview of the
Telecommunication Act, which incorporated the payment products within the jurisdiction of DFS when the
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2011 regulations were promulgated.
The MNOs then obtained a LONO from BB for the services that had been initially approved under the
Telecommunication Act, and have continued only a few of these services since that time. MNO GrameenPhone,
for example, now has two services using the brand name GPAY to provide approved services, such as utility
payments, train ticketing, lottery tickets, cricket match tickets, and airtime. They have an enabler-type system
branded as Mobicash that partners with banks under the DFS Guideline of 2011, which (under the agent
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banking regulation ) allows them to operate as partner bank agents to do partner banks; account registration
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and DFS cash-in and cash-out take place in these agent networks. GrameenPhone is not permitted to offer its
own accounts and or the associated does not have any cash-in or cash out services of its own.
Colombia

Colombia initially had a bank-based model for DFS, but after an anemic take-up of services, in 2012 the
government opened up the market to non-banks, creating a new type of financial institution called Specialized
Electronic Deposit and Payment Institutions. Funds are covered by deposit insurance and can earn interest.
Remote opening of electronic deposit accounts is allowed with a national ID.
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Georgia

The National Bank of Georgia has proposed making a determination of an SMP-type equivalence on entities
based purely on systemic concerns related to the total volume and value of the DFS transactions it processes.
Such a determination could result in restrictions on an entity’s DFS market activities and higher capital
requirements.

Ghana

In 2015, and then again in 2016, Ghana revised its market access policy, moving away from the bank-based
model to an open access model. This is part of a new National Payment Systems Strategy which seeks to

61 The draft guidelines set out that an individual company would be formed (an MFS platform) that would obtain approval as a
PSP; this MFS platform would be led by a bank, and ownership in the MFS platform would limit providers to 15% per entity. It
also contains a requirement that at least four banks must form a consortium to achieve a 51 per cent majority-ownership share,
that the maximum cap on all MNO shareholding would be 30 per cent, and that “acceptance” of an MNO as equity partner in an
MFS platform will be conditional on its extending reliable telecommunication access to all licensed MFS platforms at the same
effective standard of ease of access and pricing.” See ADB (2016) ibid.
62 Some argued that the draft actually limited competition by creating a complex multiparty ownership structure.
63 The MNOs have been lobbying the BB to open up the market to allow non-banks to participate. Dhaka Tribune (2015b) Telcos,
Banks Face off over Mobile Banking, available at https:// goo. gl/ rslTSB .
64 The minister indicated that she wants to improve competition in a market dominated by DFS SP bKash, who has 90% of the
market. The move has been opposed by bKash. See Daily Star (2016) Open up DFS to Telcos: Tarana, available at https:// goo. gl/
ScIXqr.
65 Telecommunication Act of 2011.
66 Section 8.0.
67 Section 5.0. VII.
68 It also exempts electronic deposits (within limits) from banking transaction taxes. AFI (2015) New Financial Inclusion Innovation in
Colombia: Electronic Deposits, available at https:// goo. gl/ o0XGRf.

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